Discount retailer Dollar General (NYSE: DG) has held up better than most stocks in recent weeks, which is supported by a relative strength rating of 92 from Investor’s Business Daily. The relative strength rating measures a stock’s price performance against all other stocks in the database over the past year and assigns a score of 1 through 99. A score of 92 means the stock has performed better than 92% of stocks.
Unfortunately for DG, it looks like a bearish pattern has formed on the stock. With a peak of $118.13 in November, a peak of $112.85 in December and a possible peak at $110.71 on Friday, it looks like a Three-Falling Peaks formation has formed.
The stock jumped sharply from its low on December 24 and it became overbought based on the daily stochastic readings. The peak in November came when the stock was overbought and then we saw the stochastic readings make a bearish crossover like the one we saw on Friday.
Dollar General’s fundamentals are somewhat mixed. The earnings growth for the company has been good with an average annual growth rate of 11% over the last three years. The company saw earnings grow by 34% in the most recent quarterly report and analysts expect the company to grow earnings by 31% for the year as a whole.
Unfortunatel,y the earnings growth figures are much stronger than the sales growth and the profitability measures. Sales have grown at a pace of 8% per year over the last three years. The profit margin is only 7.24% and the operating margin is only 8.36%. This presents a bit of a conundrum for investors.
The 10-day moving average for DG crossed bearishly below the 50-day moving average on May 25, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on May 19, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on DG as a result. In of 80 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for DG turned negative on May 10, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 50 similar instances when the indicator turned negative. In of the 50 cases the stock turned lower in the days that followed. This puts the odds of success at .
DG moved below its 50-day moving average on May 22, 2023 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where DG declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for DG entered a downward trend on June 07, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The RSI Indicator shows that the ticker has stayed in the oversold zone for 8 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an Uptrend is expected.
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 11 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where DG advanced for three days, in of 330 cases, the price rose further within the following month. The odds of a continued upward trend are .
DG may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.747) is normal, around the industry mean (11.589). DG has a moderately low P/E Ratio (14.663) as compared to the industry average of (22.707). Projected Growth (PEG Ratio) (1.577) is also within normal values, averaging (2.028). Dividend Yield (0.014) settles around the average of (0.030) among similar stocks. P/S Ratio (0.906) is also within normal values, averaging (1.134).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 59, placing this stock slightly better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. DG’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
an operator of retail stores
A.I.dvisor indicates that over the last year, DG has been closely correlated with DLTR. These tickers have moved in lockstep 71% of the time. This A.I.-generated data suggests there is a high statistical probability that if DG jumps, then DLTR could also see price increases.