Today's downtrend in Dollar General's stock price.
Dollar General's (DG -1.89%) shares were showing a downtrend today, despite a lack of company-specific news. Instead, it appeared to be a reaction to this morning's disappointing results from Target (TGT -0.57%). These results seemed to suggest that Walmart (WMT 0.39%), which reported earnings the previous day, was still dominating the market share, taking it away from competitors like Target and Dollar General.
As of 1:19 p.m. ET, Dollar General's stock had dropped by 4.5%.
Dollar General's Struggles Persist
Investors appear to be bracing themselves for a less-than-satisfying earnings report when Dollar General presents its third-quarter results on December 5.
Yesterday, OTR Global altered Dollar General's rating from "positive" to "neutral," as their surveys indicated some challenges for the retailer leading up to the earnings report. However, it was Target's report that seemed to be the main cause of the stock's decline today.
Target's shares plummeted more than 20% after missing forecasts on both revenues and profits, and reporting a mere 0.3% growth in comparable sales and a decrease in gross margin. Investors interpreted this as evidence that Walmart, which reported a 5% growth in comparable sales in its third quarter, was continuing to take market share from competitors such as Target and Dollar General, thereby impacting industry-wide margins.
Implications for Dollar General
Dollar General has been one of the most underperforming retailers this year, apparently due to a mix of sluggish consumer spending and pressure from Walmart. The stock has fallen by 44% since the beginning of the year and has continued to slide downward after a poor second-quarter earnings report.
With analysts anticipating revenues to grow by 4.6% to $10.1 billion but earnings per share to decrease from $1.26 to $0.95, expectations are not high for the company's next update. Given Target's weak showing, it's not surprising that investors are pushing the stock lower today.
In light of Dollar General's expected less-than-satisfying earnings report, some investors might consider diverting their finance towards more promising investments. The struggling retailer's stock has dropped significantly this year, making it a potential risk for those who are involved in money management and investing.
