Dollar General vs. Dollar Tree: Which Discount Stock Wins the Value Game?

Dollar General (DG 1.02%) and Dollar Tree (DLTR -0.43%), the two largest dollar stores in America, both survived the retail apocalypse which wiped out many other retailers over the past decade. They kept opening new stores even as other retailers pulled back, and they countered Amazon and Walmart by selling cheaper products.

That resilience made them reliable recession-resistant investments. But over the past three years, Dollar General's stock plunged more than 50% as Dollar Tree's stock dropped over 30%. Let's see why these two stocks sank -- and if either one is a better value play right now.

Image source: Getty Images.

The differences between Dollar General and Dollar Tree

Dollar General mainly opens its stores in rural areas which haven't been saturated by superstores. It doesn't actually sell everything for a dollar, but it tries to sell its products at much lower prices than its competitors. It generates most of its revenue in the U.S., but it expanded into Mexico with its Mi Súper Dollar General stores in 2022.

From fiscal 2021 and fiscal 2024 (which ended Jan. 31, 2025), Dollar General's number of year-end stores increased from 18,130 to 20,594. For fiscal 2025, it plans to open approximately 575 new stores in the U.S. and up to 15 new stores in Mexico.

Dollar Tree focuses on urban and suburban markets, and it tries to wedge its stores between lower income neighborhoods and superstores like Walmart. It originally sold all of its products for $1, but it raised its prices over the past four years to counter inflation and sell a broader range of products. It acquired its chief competitor Family Dollar in 2015, but it finally sold the struggling banner after a decade of sluggish sales this year.

From fiscal 2021 to fiscal 2024 (which ended Feb. 1, 2025), Dollar Tree's number of year-end stores (including Family Dollar) grew from 15,115 to 16,774. But in fiscal 2025, its store count will decline as it divests its Family Dollar stores. At the end of the first quarter of 2025, its Dollar Tree segment operated 9,016 stores.

What challenges do the dollar stores face?

Dollar General and Dollar Tree both grew their same-store sales over the past three years.

Data source: Company earnings reports. *Excluding Family Dollar.

Dollar General's same-store sales slowed in fiscal 2023 as it grappled with inflationary headwinds for consumer spending (especially among lower income consumers), theft and inventory shrinkage issues, and cost-cutting measures, which caused operational challenges.

But in fiscal 2024, its growth accelerated again as it closed some weaker stores, prioritized operational improvements over immediate cost-cutting strategies, and opened more Popshelf concept stores to sell a broader range of higher-margin, non-essential goods.

For fiscal 2025, it expects its same-store sales to rise 1.5% to 2.5% as it continues to open more Popshelf stores, adds gas stations to more of its rural Dollar General stores, remodels its older locations, and continues to open new stores in more promising markets. It expects its diluted EPS, which plunged 32% in fiscal 2024, to rise 2% to 14% in fiscal 2025. Analysts expect its EPS to grow 12% for the year, even as the unpredictable tariffs squeeze its near-term margins.

Dollar Tree's same-store sales growth decelerated in fiscal 2023 and 2024 as it grappled with inflation, weak consumer spending, bloated inventories, and theft. Its decision to broaden its price range alienated some of its customers, and its "combo strategy" of merging some of its Dollar Tree and Family Dollar banners didn't halt that slowdown.

But for fiscal 2025, Dollar Tree sees its same-store sales rising 3% to 5%. It expects that acceleration to be driven by its ongoing conversion of its stores to its newer multi-price "3.0 format" (with $1.25-$7.00 tiers) to attract higher income customers. The divestment of Family Dollar should also free up more cash to strengthen its main banner.

Dollar Tree expects adjusted EPS from continuing operations, which dipped 12% in fiscal 2024, to rise 1% to 11% in fiscal 2025. Analysts expect its adjusted EPS to grow 6%.

Which dollar store stock is the better value right now?

Dollar General trades at 20 times forward earnings and pays a forward dividend yield of 2.2%. Dollar Tree trades at 21 times forward earnings but doesn't pay a dividend.

Dollar General might be the cheaper stock, but I think Dollar Tree's divestment of Family Dollar, its stronger same-store sales growth, and it's clearer plans for broadening its reach among higher-income consumers make it the more compelling investment. Dollar General's focus on rural areas limits its ability to attract more affluent customers, while its expansion of Popshelf could run into a lot of competition from similar retailers like Five Below.