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Jan 07, 2019

Three Falling Peaks Formation for Dollar General

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.

Related Ticker: DG

DG sees its 50-day moving average cross bullishly above its 200-day moving average

The 50-day moving average for DG moved above the 200-day moving average on March 13, 2024. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 3 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 322 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 254 cases where DG Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The 10-day RSI Indicator for DG moved out of overbought territory on March 13, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Momentum Indicator moved below the 0 level on March 21, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on DG as a result. In of 84 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 March 15, 2024. 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 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .

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 .

DG broke above its upper Bollinger Band on March 05, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly undervalued 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 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 Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. DG’s price grows at a higher 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 consistent 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 Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. DG’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 46, placing this stock worse than average.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued 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 (5.020) is normal, around the industry mean (10.915). P/E Ratio (20.425) is within average values for comparable stocks, (23.751). DG's Projected Growth (PEG Ratio) (8.154) is slightly higher than the industry average of (3.471). Dividend Yield (0.015) settles around the average of (0.023) among similar stocks. P/S Ratio (0.877) is also within normal values, averaging (1.239).

Notable companies

The most notable companies in this group are Walmart (NYSE:WMT), Costco Wholesale Corp (NASDAQ:COST), Target Corp (NYSE:TGT), Dollar General Corp (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Big Lots (NYSE:BIG).

Industry description

Companies in the discount stores industry specialize in offering substantial discounts on a vast array of retail products. Some companies in this industry also operate general merchandise warehouse clubs. Products sold at discount stores are typically similar to those of any department store, but the pricing of the goods is generally much lower (and hence the name “discount”). Think Dollar General Corporation, Dollar Tree, Inc. and Five Below, Inc. Many discount stores target low-income households and/or price-sensitive consumers as their potential market. Discount stores’ profitability could hinge on factors like competitive pricing, sufficient locations, healthy revenue per square foot, and effective advertisement. These store operators could have an edge over other retailers during financial crises or recessions, when many consumers could be looking for less expensive alternatives.

Market Cap

The average market capitalization across the Discount Stores Industry is 69.21B. The market cap for tickers in the group ranges from 1.78K to 489.28B. WMT holds the highest valuation in this group at 489.28B. The lowest valued company is TUEMQ at 1.78K.

High and low price notable news

The average weekly price growth across all stocks in the Discount Stores Industry was 1%. For the same Industry, the average monthly price growth was 3%, and the average quarterly price growth was 16%. TBBB experienced the highest price growth at 10%, while DLMAF experienced the biggest fall at -2%.

Volume

The average weekly volume growth across all stocks in the Discount Stores Industry was 5%. For the same stocks of the Industry, the average monthly volume growth was -35% and the average quarterly volume growth was -22%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 49
P/E Growth Rating: 59
Price Growth Rating: 47
SMR Rating: 45
Profit Risk Rating: 46
Seasonality Score: 20 (-100 ... +100)
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General Information

an operator of retail stores

Industry DiscountStores

Profile
Fundamentals
Details
Industry
Discount Stores
Address
100 Mission Ridge
Phone
+1 615 855-4000
Employees
170000
Web
https://www.dollargeneral.com
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