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Analysts bullish on Dick's Sporting Goods

by Matt Higgins
May 21, 2013


Bloomberg LP/Matt Higgins, MEDILL

Twenty out of 28 analysts rate Dick's Sporting Goods stock a buy. They predict the company will meet its own forecast of higher earnings this year.


Dick’s Sporting Goods Inc. maintains its bullish reputation after reporting first quarter earnings, although they lagged the competition and sales were lower than company expectations.

For the quarter ended May 4, Dick's reported a net income of $64.8 million, up 13.4 percent from the previous year’s quarter of $57.2 million.

Dick’s reported a diluted earnings per share of 52 cents, but this GAAP figure was boosted 4 cents by a partial recovery of a previous write-down of its investment in JJB Sports Inc., a London based sporting goods store. Still, the non-GAAP 48 cents per share matched analysts’ expectation. 

First quarter sales were $1.33 billion, up 4 percent from the year-earlier $1.28 billion, but disappointing to company executives.

“In the first quarter, we generated earnings in line with our original guidance, but were not pleased with our sales results, which came in below our expectations," said Edward W. Stack, Dick’s chief executive officer, in a conference call Tuesday.

"Over the long term, we have significant opportunity to profitably grow our business by doubling the size of our store base, aggressively building our e-commerce business, and further strengthening our Omni-channel platform," he said.

Omni-channel platform is a commercial software that retailers can use to track consumers' shopping habits.

Dick’s earnings were lower than its peers Cabela’s and Big 5 Sporting goods. Despite this, analysts remain bullish on Dick’s stock.

“Management maintained full-year 2013 continuing EPS guidance of $2.84-$2.86 and full-year comp store sales guidance of 2-3 percent, reflecting management’s belief that they will be able to overcome the greater than expected sales weakness in 2013,” Wayne Hood, securities analyst at BMO Capital Markets Corp., wrote in a report Tuesday. Last year Dick's earned $2.53 per diluted share. 

William Blair & Company LLC securities analyst Mark Miller added in his own report Tuesday, “We would highlight however, the first-quarter comparison is the toughest of the year. Management indicates it will work with its vendors to provide more value offerings and continue to aggressively execute on its store remodel program to drive sales.”

Of the 28 analysts that cover Dick’s, 20 rate its stock a buy, according to Bloomberg.

Dick’s has 502 stores in 44 states, with 18 of them in the metro Chicago area. 

This month the Illinois legislature will vote on a bill that would allow Illinois residents to carry a concealed gun, which could provide a boost in sales by gun retailers such as Dick's. Even without concealed-carry, the Illinois State Police is already “experiencing a record number” of gun-registration applications, according to its website. The National Rifle Association said Illinois applications last month totaled 28,000.

Dick’s stock closed Tuesday at $52.76, up 55 cents.