Yahoo Finance Here's Why DICK'S Sporting (DKS) Is a Lucrative Investment Bet
DICK'S Sporting Goods, Inc. DKS is well-poised to tap the positive trends in the sporting industry, thanks to its robust strategies, including merchandising initiatives and store-related efforts. The company is gaining from brand strength and demand for its products that resonate well with customers. Undoubtedly, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing and efficiently controlling expenses.
Buoyed by such strengths, shares of this sporting goods dealer have gained 48.7% compared with the industry’s 2.8% growth in the year-to-date time frame. A Value Score of A further adds strength to this Zacks Rank #2 (Buy) company.
Let’s Delve Deeper
DICK’S Sporting’s store-related efforts are on track. The company had launched DICK'S House of Sport, Golf Galaxy Performance Center, Public Lands and Going, Going, Gone!, which have been performing well. In the fiscal first quarter, it opened two House of Sport locations. It remains on track to introduce six additional stores this year.
The company also opened two next-generation 50K locations in the fiscal quarter and looks forward to opening an additional 14 locations in 2024. The total store count was 863, including 106 Golf Galaxy stores, seven Public Lands stores and 18 Going Going Gone! stores and other specialty concept stores, as of May 4. By 2027, it anticipates opening 75 to 100 House of Sport stores nationwide.
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In addition, the company is emphasizing the omnichannel athlete experience to drive solid athlete engagement. It has been enhancing service levels at its digital and store experiences to cater well to athletes. During the fiscal first quarter, the company witnessed growth in the omnichannel athletes’ performance. It also continues to invest in the digital capabilities.
Further, the company is making significant investments to reposition its portfolio to deliver an elevated omnichannel athlete experience. Management expects House of Sport and the next-generation 50,000 square-foot DICK's store to boost strong omnichannel athlete engagement, and in turn, generate huge sales and profitability.
DICK’S Sporting Goods has been benefiting from the brand strength and continued market share gains. The company is on track with business optimization to streamline the overall cost structure. This led to a robust top-line performance in the fiscal first quarter. Also, strong comparable store sales (comps) and healthy transaction growth acted as tailwinds. Net sales improved 6.2% year over year, while consolidated comps grew 5.3%, driven by higher transactions and average tickets.
Management has raised its fiscal 2024 guidance. It expects net sales to be in the range of $13.1-$13.2 billion. It anticipates comps growth to be in the band of 2-3% compared with the prior expectation of 1-2%. EBT margin is forecast to be 11.1% at the midpoint compared with 10.9% guided earlier. The gross margin is likely to expand modestly year over year. DKS envisions adjusted earnings in the band of $13.35-$13.75 per share compared with the earlier guided range of $12.85-$13.25.
Given all the positives, DICK’S Sporting stock seems to deserve a place in your investment bucket. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $13.2 billion and $13.76, respectively. These estimates indicate corresponding growth of 1.8% and 6.6% year over year. The consensus mark for the next fiscal year’s sales and EPS is $13.8 billion and $14.72, respectively, implying a year-over-year increase of 4.6% and 7%.
Other Key Picks
We have highlighted three other top-ranked stocks, namely Abercrombie ANF, Gap GPS and Tractor Supply TSCO.
Abercrombie, a specialty retailer of casual apparel, currently sports a Zacks Rank #1 (Strong Buy). ANF delivered an earnings surprise of 210.3% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 10.4% from the year-ago reported figure.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 202.7%, on average.
The consensus estimate for Gap’s current financial-year EPS implies growth of 21.7% from the year-ago reported figure.
Tractor Supply, the largest retail farm and ranch store chain in the United States, currently carries a Zacks Rank of 2. TSCO delivered an earnings surprise of 2.7% in the trailing four quarters.
The Zacks Consensus Estimate for Tractor Supply’s current financial-year sales indicates growth of 3% from the year-ago reported figure.
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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
