Understanding how DICK'S Sporting Goods, Inc. (NYSE:DKS) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how DICK'S Sporting Goods is doing by comparing its latest earnings with its long-term trend as well as the performance of its specialty retail industry peers.
Did DKS's recent performance beat its trend and industry?
DKS's trailing twelve-month earnings (from 02 November 2019) of US$330m has declined by -0.9% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -1.4%, indicating the rate at which DKS is growing has slowed down. What could be happening here? Let's examine what's going on with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, DICK'S Sporting Goods has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. Furthermore, its return on assets (ROA) of 4.8% is below the US Specialty Retail industry of 5.9%, indicating DICK'S Sporting Goods's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for DICK'S Sporting Goods’s debt level, has declined over the past 3 years from 18% to 8.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 17% to 42% over the past 5 years.
What does this mean?
Though DICK'S Sporting Goods's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I suggest you continue to research DICK'S Sporting Goods to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DKS’s future growth? Take a look at our free research report of analyst consensus for DKS’s outlook.
- Financial Health: Are DKS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 02 November 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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