What happened

Shares of modern day five-and-dime super-chain Dollar General (NYSE:DG) slipped lower on Thursday, down 3.3% as of 12:45 p.m. ET despite beating projections on third-quarter earnings this morning.

Analysts had forecast Dollar General would earn $2.01 per share on sales of just under $8.5 billion in fiscal Q3. In fact, the company hit $8.5 billion on the nose, and earned $2.08 per share.  

Woman making a strange expression while holding a very small shopping basket.

Image source: Getty Images.

So what

Yet even so, Dollar General's news wasn't great. Although the company eked out a small "beat" on the sales front, net sales for the quarter still only grew about 4% year over year, and same-store sales declined 0.6%.  

Profits-wise, gross margin slipped about 60 basis points to 30.8%. Rising operating costs, however, resulted in a much bigger decline in operating profit margin -- down 160 basis points to 7.8% -- and net profit margin was somewhere in between -- down 130 basis points at 5.7%.

Result: Despite beating estimates, on the bottom line, Dollar General's profits per share declined by 10%.

Now what

So you see why investors were a bit disappointed in the results. Now, the news on guidance was a bit better, but apparently still not quite good enough to move the stock higher today.

On the one hand, Dollar General raised the floor on its guidance range for earnings this fiscal year, and now expects to earn between $9.90 and $10.20 per share. On the other hand, the company still has to max out that range if it's to meet analyst forecasts for $10.20 per share, period.

Similarly, management reassured investors that it expects to see sales grow between 1% and 1.5% for the full year. But again, with analysts forecasting 1.5% sales growth already, only reaching the very tippity-top of its range will be good enough for Wall Street.  

Long story short, Dollar General exceeded expectations in Q3. But with no assurance that it will repeat the feat in Q4, investors seem leery of buying more Dollar General stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.