Can Dollar General Stock Topple a Key Trendline After Earnings?

DG is down 9% in 2022

Digital Content Manager
Mar 16, 2022 at 1:44 PM
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The shares of discount retailer Dollar General Corp. (NYSE:DG) are struggling for direction ahead of the firm's fourth-quarter earnings report, which is due out before the open tomorrow, March 17. The equity was last seen down less than 0.1% to trade at $214.23, as it struggles with dual pressure at the 80-day moving average and the $216 level. Year-to-date, DG is down 9%, though it boasts a 10.6% 12-month lead. 

dg march 16 new

The equity tends to drop the day after earnings, with seven of its past eight next-day sessions yielding negative returns. DG has averaged a 3.5% post-earnings swing, regardless of direction, which is much smaller than the 8.5% swing options traders are pricing in this time around. 

Speaking of options trading, these investors have picked up their pace ahead of the event, with the 3,144 calls and 2,700 puts running at two times the intraday average. The March 230 call is the most popular, followed by the May 230 call. 

A broader look shows an unusual preference for long puts of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Dollar General stock sports a 10-day put/call volume ratio of 1.97, which stands in the 98th percentile of its 12-month range. Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.27 stands higher than 85% of readings from the past year, meaning short-term options traders share this affinity for puts right now. 

Analysts have taken a slightly more optimistic stance. Of the 17 in coverage, 11 say "strong buy," compared to five "holds," and one "sell" rating. Meanwhile, the 12-month consensus price target of $241.16 is a 12.7% premium to current levels. 



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