2 Retail Stocks Seeing Influx of Calls Before Earnings - Schaeffer's Investment Research
💰 Dollar General Corp (DG) reports before the open tomorrow and is currently trading down 1.1% at $144.45, hovering near a multi-week low of $141.62 with support at the $140 level.
🌳 Dollar Tree Inc (DLTR) releases its report on Monday, trading 1.6% lower at $114.97 and pulling back near its early August peak and ascending 180-day moving average.
📉 DLTR now carries a 6% deficit for 2026 after backpedaling roughly 20% from its January annual high, while DG maintains a 9% year-to-date gain despite failing to break above $160.
📊 Following their last eight reports, DG and DLTR have moved higher five and three times respectively, with traders expecting average volatility moves of 12.1% and 12.3%.
🧭 Options traders lean bullish on both stocks, citing 50-day call/put volume ratios of 2.38 for DG and 2.55 for DLTR across major exchanges.
⚠️ These call-to-put ratios rank in the 75th and 88th annual percentiles respectively, indicating heightened speculative interest ahead of earnings releases.
🤹 Short sellers have been building positions, with short interest increasing by 9.1% for DG and 5.4% for DLTR during their most recent reporting periods.
📈 Short selling activity now accounts for 3.5% of DG's total available float and 6.2% of DLTR's total available float.
🚀 Both retail stocks are categorized as stragglers in the fourth-quarter earnings season, with results scheduled to come out just before the market open on Monday.
Bullish Signals
- Dollar Tree Inc (NASDAQ:DLTR) and Dollar General Corp (NYSE:DG) are poised to present fresh upside potential following a period of technical consolidation, with both names showing resilience as they hover near key support levels. Dollar Tree is trading near its early August peak and ascending 180-day moving average, while Dollar General maintains a sticky range bottom around $140 after demonstrating a strong 9% year-to-date gain despite recent short-term fluctuations. This sustained support suggests confidence in their long-term value proposition, positioning both retailers to potentially break out as earnings season nears and traders look for catalyst-driven moves ahead of the open tomorrow and on Monday.
- Bullish sentiment is clearly building among sophisticated investors, evidenced by robust options activity with call/put volume ratios of 2.38 for Dollar General and 2.55 for Dollar Tree. These elevated ratios rank in the 75th and 88th annual percentiles respectively, signaling that market participants are pricing in significant upside potential for both tickers. Historical performance further reinforces this optimism; over the last eight earnings reports, Dollar General has moved higher five times while Dollar Tree has done so three times, with current expectations projecting a 12.1% and 12.3% move respectively—substantially larger than their historical averages of 10.3% and 8.3%.
- Institutional and retail attention remains strong despite visible short-building activity, which can often precede a sharp reversion to the mean as smart money steps in. Short interest has increased notably to 3.5% for Dollar General and 6.2% for Dollar Tree during recent reporting periods, suggesting that while some traders are betting against immediate momentum, broader consensus leans toward continued appreciation. The retail sector continues to perform with these names showing discipline around key technical thresholds, offering high-conviction opportunities for investors looking to capitalize on potential earnings-driven rallies. As the market eyes the next major report from this group of stragglers, the combination of technical support and bullish options flow points toward a favorable setup for continued gains.
Risk Factors
- Dollar Tree Inc (NASDAQ:DLTR) faces significant downward pressure ahead of its earnings report, trading 1.6% lower at $114.97 and pulling back near the site of its early August peak. The stock has already retreated roughly 20% from its January annual high, raising concerns about sustained weakness rather than a temporary correction. Analysts note that DLTR now carries a 6% deficit projection for 2026, suggesting potential long-term profitability challenges that could weigh on investor sentiment. Market dynamics remain fragile as the stock has backpedaled significantly despite attempting to hold support near its ascending 180-day moving average.
- Competitor Dollar General Corp (NYSE:DG) also shows cautionary signals, trading down 1.1% at $144.45 and unable to break above the key $160 resistance level for an extended period. Although DG maintains a sticky range with support at $140, which aligns with levels seen on Jan. 30, its inability to regain strength above $160 after posting only a 9% year-to-date gain indicates stagnation. The retail sector may be facing headwinds as both companies have struggled to consistently outperform recent expectations, having moved higher five and three times respectively over their last eight reports compared to the higher volatility traders now anticipate with a projected 12.1% move for DG.
- Derivatives data presents a mixed but potentially concerning signal of divergent sentiment around these earnings releases. While options traders lean bullish with high call volume ratios of 2.38 for DG and 2.55 for DLTR, ranking in the 75th and 88th annual percentiles, this optimism is offset by growing short interest building into positions up 9.1% for DG and 5.4% for DLTR during recent reporting periods. These shorts account for 3.5% of DG's total float and a more substantial 6.2% of DLTR's available float, highlighting active bearish positioning that could exacerbate volatility if earnings miss expectations or if broader retail sales disappoint the market before tomorrow’s open.
Full Analysis
Dollar General Corp (NYSE:DG) and Dollar Tree Inc (NASDAQ:DLTR) are two retail stocks preparing to report fourth-quarter earnings after the majority of the season has concluded. Shares of DG are currently trading down 1.1% at $144.45, maintaining support around the $140 level which previously held during a pullback on Jan. 30, despite failing to break above $160; however, the stock has recorded a 9% year-to-date gain. DLTR is trading lower by 1.6% at $114.97 near its early August peak and ascending 180-day moving average, carrying a 6% deficit for 2026 after backpedaling approximately 20% from its January annual high.
Historical performance following the last eight earnings reports shows DG rose five times out of eight with an average move of 10.3%, while DLTR rose three times out of eight with an average 8.3% move; traders are now anticipating larger swings, expecting a 12.1% move for DG and a 12.3% swing for DLTR. Options data indicates a bullish lean among traders, with 50-day call/put volume ratios of 2.38 and 2.55 respectively at exchanges including the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). These ratios rank in the 75th and 88th annual percentiles, highlighting strong call activity relative to put trading.
Short interest for both companies has increased during their most recent reporting periods, with short interest rising 9.1% for DG and 5.4% for DLTR, representing 3.5% of DG's float and 6.2% of DLTR's total available floats. The article notes that DG and DLTR are expected to report earnings coming out before the open tomorrow and on Monday, respectively. A promotional segment at the end of the text offers a subscription service called "Trade of the Week" for $40 over four weeks, led by Schaeffer's Senior V.P. of Research Todd Salamone, which claims to provide fully defined options trades backed by 30+ years of experience.
