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Should Value Investors Buy Dick's Sporting Goods (DKS) Stock?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Dick's Sporting Goods (DKS). DKS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.14, while its industry has an average P/E of 12.68. Over the past year, DKS's Forward P/E has been as high as 12.49 and as low as 8.87, with a median of 10.74.

Investors should also recognize that DKS has a P/B ratio of 1.89. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 5.65. Within the past 52 weeks, DKS's P/B has been as high as 2.03 and as low as 1.53, with a median of 1.80.

Finally, we should also recognize that DKS has a P/CF ratio of 6.10. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 18.68. Over the past 52 weeks, DKS's P/CF has been as high as 6.98 and as low as 5, with a median of 5.96.

Value investors will likely look at more than just these metrics, but the above data helps show that Dick's Sporting Goods is likely undervalued currently. And when considering the strength of its earnings outlook, DKS sticks out at as one of the market's strongest value stocks.


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