U.S. Markets close in 2 hrs 46 mins

Will DICK'S Sporting (DKS) Sustain its Momentum in 2020?

Zacks Equity Research

DICK'S Sporting Goods, Inc.’s DKS performance on bourses remains sturdy in 2019, which is likely to continue in the next year owing to its omni-channel expansion efforts and merchandise strategy. Moreover, the company’s consistent endeavors to exit underperforming businesses to boost same-store sales (comps) bode well.

Buoyed by such efforts, the Zacks Rank #1 (Strong Buy) stock has surged 56.4% year to date compared with the industry’s 12.5% rise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impressively, the sporting goods retailer has also cruised ahead of the Retail-Wholesale sector’s 25.4% gain and the S&P 500 Index’s 28.7% growth. Its long-term expected earnings growth rate of 6.5% coupled with a Momentum Score of A indicates the stock’s inherent strength.

Let’s discuss.

Strategic Efforts

Speaking of the company’s omni-channel expansion initiatives, DICK’S Sporting aims to build the best experience by strengthening its store network and e-commerce presence. Additionally, the company is making strategic partnerships and agreements to improve its digital marketing capabilities. On store front, the company has completed its store-development program for fiscal 2019.

Management has been making investments to enhance in-store experiences, improve e-commerce fulfillment capabilities and develop technology solutions to boost athlete experience as well as employee productivity.

Meanwhile, DICK’S Sporting is progressing well with its merchandising strategy, which includes optimizing inventory to make shelves available for popular and private label brands. Its efforts to improve in-store experience include space reallocation to regionally relevant and growing categories, the rollout of HitTrax technology and batting cages in several stores as well as investment in product development teams.

Further, private brands like CALIA, Walter Hagen Alpine Design and DSG are key strengths within its assortments. DICK’S Sporting is also encouraged about its product launches in the next fiscal.

As stated earlier, the company is on track to replace its underperforming hunting category across its stores with more prudent assortments. DICK’S Sporting expects to continue the strategic review of its hunting business, which includes the Field & Stream format. Earlier, management had removed the underperforming electronics business. Exiting underperforming categories and growth endeavors have been fueling the company’s comps, which are expected to move up 2.5-3% in the current fiscal.

Bottom Line

Clearly, the aforesaid growth drivers make us confident of DICK'S Sporting’s upbeat performance in the next year. Further, the Zacks Consensus Estimate for the company’s fiscal 2020 top and bottom line indicates year-over-year improvement of 1.5% and 5.1%, respectively.

More Key Picks in Retail

Hibbett Sports, Inc HIBB has an impressive long-term earnings growth rate of 12.2%. The company currently sports a Zacks Rank #1.

Sally Beauty Holdings, Inc SBH, which is also a Zacks Rank #1 stock, beat earnings estimates in three of the trailing four quarters, the average being 4.2%.

Bed Bath & Beyond Inc BBBY has an expected long-term earnings growth rate of 6.4%. The company currently has a Zacks Rank of 2 (Buy).

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>