Earnings Preview: Dollar General

| About: Dollar General (DG)

By Michael Zerinskas

Dollar General Corp. (NYSE: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.

Technical Picture

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 (NYSE:PG), Kimberly Clark (NYSE:KMB), Unilever (NYSE:UL), Kellogg (NYSE:K), General Mills (NYSE:GIS), Nabisco, Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP), as well as private brand selections.

Disclosure: No position