By Michael Zerinskas
Dollar General Corp. (DG) closed out at 27.38. The company is scheduled to report earnings August 31st, before the opening bell.
The Street is looking for Q2 earnings per share of $0.38 on revenue of $3.22 billion. These estimates have risen by $0.01 (+2.7%) over the past 90 days. The Whisper number for DG is $0.38.
The Street is looking for Q3 EPS of $0.35 on revenue of $3.23 billion. The full year 2010 estimates are $1.72 per share on revenue of $13.09 billion; FY 2011 is at $2.03 per share on revenues of $14.26 billion.
DG has been moving largely sideways for the past five months, though has recently found resistance at $30.00 and has sold off, below the 50-day moving average. Given the stocks strong move higher since late 2009, when it was trading near $22.00, a period of consolidation seems to be in order.
Both historical volatility and implied volatility have been down-trending over the past few months after a spike higher in mid-May. Currently HI is at 33% and IV is at 36%. The front month $25.00/30.00 strangle is trading at 38.87%; the October $25.00/30.00 strangle is trading at 36.84%
Dollar General Corporation is a discount retailer. As of February 26, 2010, the company had 8,877 stores located in 35 states, primarily in the southern, southwestern, midwestern and eastern United States. The company offers a selection of merchandise, including consumables, seasonal, home products and apparel. Its merchandise includes national brands from manufacturers, such as such as Procter & Gamble (PG), Kimberly Clark (KMB), Unilever (UL), Kellogg (K), General Mills (GIS), Nabisco, Coca-Cola (KO) and PepsiCo (PEP), as well as private brand selections.
Disclosure: No position