Dollar General, Ollie's Shares Fall: Analysts Positive On Results, Investors Take Profits

Shares in bargain stores saw some selling on Thursday after Dollar General Corp.’s (NASDAQ:DG) results failed to impress the market.

The numbers weren’t bad. Third-quarter earnings were better than expected, although down year-on-year due to some “tough customer spending trends and ongoing business investment,” according to analysts at Telsey Group.

Dollar General maintained its full-year 2023 earnings outlook as sales increased over the quarter and the company reported positive traffic numbers.

Also Read: Why Variety Stores Chain Dollar General’s Shares Are Shooting Higher Today

Shares Come Under Attack

After climbing by more than 4% during pre-market trade, Dollar General shares went sharply into reverse after the open and, by lunchtime in New York (ET), were down 0.7% at $132.99.

Shares in its rivals were also lower, with Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) shedding 4.8% to $72.71, even after it too reported forecast-beating results in the previous trading session. Dollar Tree Inc (NASDAQ:DLTR) fell 1% to $124.77 and Five Below (NASDAQ:FIVE) slid 2.1% to $197.36.

Thursday’s share sell-off may have been investors taking some profit off the table. The shares have been on a decent run, with Dollar General up 30% since early October, Ollie’s up 38% since June and Five Below up 35% since the end of October.

Analysts Like The Numbers

Certainly, analysts appeared to like the results of both Dollar General and Ollie’s.

“We expect the stock (DG) to track higher given better-than-expected third-quarter results, while full-year guidance was reiterated. We also note the 2024 new store target came in better than feared,” said Kate McShane, analyst at Goldman Sachs, which maintained a buy rating on the stocks and a price target of $138.

Joseph Feldman analyst at Telsey Group said of DG’s results: “After multiple quarters of comp and EPS misses, we believe we are starting to see some stabilization relative to expectations, partly offset by the uncertain macro trends.”

Following Ollie’s strong results, UBS raised its price target on the stock from $92 to $95 and maintained its neutral rating.

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Photo: Courtesy Dollar General