DICK'S Sporting Goods, Inc. DKS looks good backed by its growth initiatives, merchandising and store growth strategies, as well as impressive earnings history. This Zacks Rank #3 (Hold) stock also boasts a VGM Score of “A”, with a long-term earnings growth rate of 13%, which highlights its growth potential.
Dick's Sporting Goods Inc Price and Consensus
Dick's Sporting Goods Inc Price and Consensus | Dick's Sporting Goods Inc Quote
Let’s Delve Deep
DICK’S Sporting’s unique strategy of offering exclusive branded merchandise provides it with a platform to compete with other players in a better way. Additionally, management announced a new merchandising strategy, which is about optimizing inventory in order to make shelves available for popular and private label brands. In the process, the company targets cutting down nearly 20% of its vendor list in fiscal 2017, to focus on strategic vendors that provide both online and offline business. We believe the latest merchandise strategy is likely to optimize DICK’S Sporting’s collection.
Meanwhile, the company is also aggressively expanding its store base and eCommerce capabilities to achieve its long-term revenue target of $8.7–$9.0 billion by the end of fiscal 2017. In fact, DICK’S Sporting’s fiscal 2017 store growth is focused on the new and underpenetrated areas that were previously served by rival firms. This is likely to help the company capture displaced market share from the recent wind down of rivals The Sports Authority, Sport Chalet and Golfsmith. .
DICK’S Sporting appears compelling from the earnings perspective as well. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average of 9.8%. Furthermore, it posted solid fourth-quarter fiscal 2016 results, wherein both the top and bottom lines surpassed estimates and rose year over year. Results continued to gain from the consolidation in the sporting goods space and opportunities arising from the liquidation of rival firms. Also, the company benefited from robust eCommerce performance and continued market share gains.
All these initiatives cushioned the stock to outperform the Zacks categorized Retail – Miscellaneous/Diversified industry in the past one year. While the company’s shares rose 1.5%, the industry recorded a decline of nearly 5%.
However, the Zacks Consensus Estimate of 54 cents and $3.71 declined 9 cents for both the first quarter and fiscal 2017, respectively, over the last 30 days. This plunge was due to the company’s dull outlook.
For fiscal 2017, the company expects adjusted earnings to range from $3.65−$3.75 per share. Moreover, it envisions adjusted earnings per share to lie in the band of 50–55 cents for the fiscal first quarter.
Going ahead, macroeconomic headwinds, seasonality risks and intense competition may weigh upon the company’s financial performance.
Investors looking for better-ranked stocks in the Retail-Wholesale space may opt for The Children's Place, Inc. PLCE, Big 5 Sporting Goods Corporation BGFV and MarineMax, Inc. HZO.
The Children's Place, with a long-term earnings growth rate of 10.3%, has surged 50.4% in the past six months. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Big 5 Sporting, which carries a Zacks Rank #2 (Buy) has a long-term earnings growth rate of 12 %. The stock rose nearly 36.2% in the past one year.
MarineMax, a Zacks Rank #2 stock, has increased nearly 14%, in the past one year. Also, the company’s earnings have outpaced the Zacks Consensus Estimate with an average of 131.2% in the past four quarters.
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