Categories Analysis, Leisure & Entertainment
A look at how Dick’s Sporting Goods (DKS) will fare going forward
Dick’s Sporting Goods’ (NYSE: DKS) shares have fallen 30% since the beginning of this year. The stock is currently trading 30% below its 52-week high of $49.80. The company is set to report fourth quarter 2019 earnings results on Tuesday and if the numbers beat expectations, the stock could see a pickup.
Dick’s Sporting saw healthy sales and comps growth with meaningful expansion in margins last quarter. The company also witnessed increases in average ticket and transactions. The retailer has seen strength in the hardlines, footwear and apparel categories and expects this momentum to continue.
In apparel, Dick’s Sporting has been gaining market share in athleisure and has seen strong comps. The company continues to invest in athletic apparel and remains optimistic about this category. The hunting category has been underperforming for a while and replacing this category with other better-performing ones has helped improve margins.
The company has been investing in expanding its store network and has announced the opening of seven new stores in the past two months. Dick’s Sporting has also been working on developing its omnichannel capabilities and its ecommerce business is doing well.
The company will also benefit from its ongoing digital marketing efforts. However, higher costs and investment-related expenses are likely to weigh on margins and this remains a concern for investors.
Analysts expect the company to report earnings of $1.22 per share on revenue of $2.57 billion for the fourth quarter of 2019. The company beat revenue and earnings estimates for the third quarter of 2019. Net sales increased 6% to $1.96 billion while adjusted EPS totaled $0.52.
Owing to its ongoing development efforts and the momentum in its topline and margins, the stock might see a recovery in the coming days. The majority of analysts have rated the stock as Hold and it has an average 12-month price target of $49.80.
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