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DICK'S Sporting's (DKS) Q3 Earnings & Sales Surpass Estimates

Zacks Equity Research
·3 min read

DICK'S Sporting Goods, Inc. DKS posted better-than-expected third-quarter fiscal 2020 results, wherein both top and bottom lines improved year over year. Results gained from favorable customer demand, a solid product portfolio and strength in the online platform. Going forward, the company noted that this strong momentum continued in the fourth quarter, which was somewhat hurt by adverse weather.

Q3 in Detail

In the fiscal first quarter, DICK'S Sporting reported adjusted earnings of $2.01 per share, up more than three-fold from 52 cents in the prior-year quarter. The figure also surpassed the Zacks Consensus Estimate of 94 cents per share.

Net sales of $2,412.1 million rose 22.9% year over year and exceeded the Zacks Consensus Estimate of $2,254 million. This uptick can be attributable to improved store sales and a robust online show. Notably, consolidated same-store sales (comps) grew 23.2% with e-commerce sales surging 95% year over year. E-commerce was nearly 21% of net sales in the reported quarter compared with 13% in the prior-year quarter. Till the first three weeks of the aforementioned quarter, consolidated comps grew in high teens.

Gross margin expanded roughly 532 basis points (bps) to 34.9% in the quarter under review. Meanwhile, SG&A expenses, as a percentage of sales, contracted 127 bps year over year to 23.8% due to sturdy sales growth. This is inclusive of $48 million of extra compensation and safety expenses associated with COVID-19.

DICKS Sporting Goods, Inc. Price, Consensus and EPS Surprise

DICKS Sporting Goods, Inc. Price, Consensus and EPS Surprise
DICKS Sporting Goods, Inc. Price, Consensus and EPS Surprise

DICKS Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICKS Sporting Goods, Inc. Quote

Financial Aspects

DICK'S Sporting ended fiscal 2020 with cash and cash equivalents of $1,060 million, no borrowings under its $1.9-billion revolving credit facility and total stockholders' equity of $2,121.6 million. Further, total inventory declined 9.8% year over year as of Oct 31, 2020. In the nine months ending Oct 31, 2020, total capital expenditure amounted to $156.4 million.

Dividend Payments and Share Repurchases

Although the company did not repurchase any shares in the reported quarter, it has resumed its dividend program. It approved a dividend of 31.25 cents per share on its Common Stock and Class B Common Stock, which is payable on Dec 29 as of shareholders record on Dec 11.

Price Performance

We note that shares of this Zacks Rank #3 (Hold) stock have gained 26% in the past three months, outperforming the industry’s 4.5% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

3 Stocks to Watch in the Retail Space

The TJX Companies TJX has a long-term earnings growth rate of 10.5% and a Zacks Rank #2 (Buy).

Target Corp. TGT has an expected long-term earnings growth rate of 7.2% and a Zacks Rank #2.  

The Kroger Co. KR has an impressive long-term earnings growth rate of 6.2% and a Zacks Rank #2.

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