New Highs for Dollar General Stock After Earnings

Dollar General's first quarter earnings and revenue topped Wall Street's estimates

Discount retailer Dollar General Corp (NYSE:DG) stepped into the earnings confessional this morning, reporting fiscal first-quarter profits of $2.56 -- nearly a dollar more than what Wall Street expected -- on revenue of $8.45 billion, which also topped expectations. In addition DG's comparable-store sales climbed by 7%, noting that the coronavirus pandemic actually had a positive impact on sales.

Out of the gate, Dollar General stock hit a new record high of $188.84, but has since pared those gains. The shares have spent the last three months carving out a channel of higher highs, to the tune of a 57% year-over-year lead. During this climb, DG's 30-day moving average contained the sharper pullbacks.

Analysts are extremely bullish toward the equity. Of the 17 in coverage, 12 sport a "buy" or better, with not a "sell" to be seen. Plus, the 12-month consensus price target of $186.13 is a conservative 1.1% discount to current levels could signal some price-target hikes in the near future.

In the wake of the upbeat quarterly report, DG's options pits are popping today. In just the first hour of trading, over 7,000 options have changed hands, eight times the average intraday amount and volume in the top percentile of its annual range. Leading the charge is the weekly 5/29 200-strike call, followed closely by the 195-strike call from the same series.

Meanwhile, with earnings come and gone, a volatility crush means options are affordably marked. DG's Schaeffer's Volatility Index (SVI) of 34% sits in the 27th percentiles of all other readings from the past year. This means options players have been pricing in relatively low volatility expectations at the moment.