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

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Zacks Equity Research
·3 min read
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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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Dick's Sporting Goods (DKS) is a stock many investors are watching right now. DKS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.26 right now. For comparison, its industry sports an average P/E of 17.44. Over the past 52 weeks, DKS's Forward P/E has been as high as 30.38 and as low as 4.34, with a median of 13.18.

Investors should also note that DKS holds a PEG ratio of 1.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DKS's industry has an average PEG of 2.44 right now. Over the past 52 weeks, DKS's PEG has been as high as 7.45 and as low as 0.72, with a median of 2.28.

We should also highlight that DKS has a P/B ratio of 2.22. 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 stock's P/B looks attractive against its industry's average P/B of 5.76. Over the past 12 months, DKS's P/B has been as high as 2.91 and as low as 0.81, with a median of 2.15.

Finally, we should also recognize that DKS has a P/CF ratio of 7.20. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.79. DKS's P/CF has been as high as 10.10 and as low as 2.54, with a median of 7.22, all within the past year.

These are just a handful of the figures considered in Dick's Sporting Goods's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DKS is an impressive value stock right now.


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Zacks Investment Research