Retail Stock Eyes Sixth Straight Loss Despite Bull Note

DG remains above its year-to-date breakeven level, though

Deputy Editor
Aug 26, 2022 at 9:57 AM
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Dollar General Corp. (NYSE:DG) is in focus this morning, after Guggenheim hiked its price target to $270 and reiterated its bullish view. After unpacking the discount retailer's earnings and revenue beats for the second quarter yesterday, the brokerage firm noted, “bottom line, we believe DG’s above-average top- and bottom-line momentum should drive outperformance at least through year-end..."

Guggenheim isn't the only analyst weighing in today; at least four more issued price-target hikes between last night's close and today's open, with Raymond James and Telsey Advisory Group both adjusting their price objective up to $285. Coming into today, 10 of the 16 covering analysts called Dollar General stock a "buy" or better, while the 12-month consensus of $265.09 is a 7.7% premium to its current perch.

An unwinding of pessimism in the options pits could also have bullish implications for DG. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day put/call volume ratio of 1.20 that stands higher than 92% of readings from the last year. What's more, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.78 stands in the elevated 82nd percentile of annual readings. Both of these readings indicate puts have been favored of late.

Those looking at options are in luck, as Dollar General stock sports affordable premium at the moment. This is per the equity's Schaeffer's Volatility Index (SVI) of 25%, which stands in the relatively low 25th percentile of readings from the last 12 months, implying options traders are pricing in lower-than-usual volatility expectations. What's more, its Schaeffer's Volatility Scorecard (SVS) tally of 94 out of 100 suggests the equity tends to outperform said volatility expectations.

At last check, DG was up 1.3% to trade at $242.75, on track for their sixth loss. While it's not ideal the shares are lower amid the bullish analyst attention, DG is still trading within striking distance of its April 21, all-time high of $262.10, and is holding above its year-to-date breakeven level.


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