Dollar General heads into its June 2 earnings report carrying fresh downside protection after a disappointing May 28 print sent investors scrambling to reassess.
The mood in options has turned more defensive since the May 28 earnings miss. The put/call ratio climbed to 1.10 on May 29, above its 20-day average of 1.05 — a reversal from the call-buying trend documented ahead of the prior print. That shift is modest in absolute terms (the 52-week PCR high is 1.63), but the directional change is meaningful: traders who rotated into calls before May 28 are now rebuilding hedges. Short interest has moved the same way. Shares short rose 7.5% over the past week to 3.98% of free float — unwinding a chunk of the short-covering that defined the pre-earnings setup. The borrow market remains relaxed, with availability at a very loose 2,261% and cost to borrow at just 0.46%, so there is no squeeze pressure constraining bearish positioning.
The debate is squarely about whether Dollar General's lower-income customer can hold up. Bulls point to 5.9% revenue growth in fiscal 2024, DG delivery adoption, and a 17% rise in $1 items in Q4 as evidence the value proposition is resonating. The analyst community has been trimming targets into the print, not convictions: Oppenheimer lowered its target to $150 from $170 this week while keeping its Outperform rating, and Truist cut to $109 from $139 while staying at Hold. The mean price target of $138 still implies roughly 25% upside from the current $110.61 — but targets have been drifting lower consistently since March. Bears focus on muted gross margin expansion, the vulnerability of the core customer to gas prices and tariff-driven inflation, and the risk of market oversaturation as competitors expand into DG's territory.
The stock's own recent history frames the risk clearly. The May 28 print delivered a sharp 6% one-day gain, but the March 12 report produced a 9% one-day drop that extended to a nearly 15% loss over five days — a reminder of how violently the market can reprice when guidance disappoints. Dollar Tree, the closest peer by correlation, surged 17.9% on Thursday alone, which may complicate the read on sector-level sentiment heading into DG's report.
The June 2 print will test whether the full-year guidance cut that followed May 28 was conservative enough — or whether the consumer and margin pressures are still deepening.
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