Earnings Preview: Dicks Sporting Goods likely to win investors’ faith

Dicks Sporting Goods (DKS) is anticipated to release its second-quarter 2018 earnings on Wednesday before the market opens. Analysts expect the sporting goods retailer to post upbeat top and bottom line results for the quarter. Investors will be looking out for e-commerce growth, store performance and what management says about the increase in sporting activities.

Analysts, on average, predict the company to report earnings of $1.06 per share for the quarter compared to a profit of $0.96 per share in the previous year quarter. Sales are projected to rise by 3.8% to $2.24 billion. Most of the analysts are recommending a “hold” rating with an average price target of $39.29.

Investors are looking forward to an earnings surprise for the fifth consecutive quarter with analysts expecting a 10.4% year-over-year growth. However, growth estimates are likely to fall by 23.3% per annum in the next quarter. This could make traders take a cautious stance on Tuesday ahead of the results.

During the recently completed first-quarter, strong e-commerce growth helped the company’s profit to jump 3.2%. However, comparable store sales fell by 2.5% due to continued softness in electronic sales and unfavorable weather conditions disrupting sporting activities.

For full-year 2018, the company had predicted earnings in the range of $2.92 to $3.12 per share and comparable store sales to be flat to a low single-digit decline.

Investors expect the company’s Q2 bottom line to be benefited by higher merchandise margins. The company is expected to focus on optimizing inventory and supply chain investment for merchandising strategy and stock improvement.

Zacks Equity Research believes that the retailer would be keen on the speed and reliability of online delivery in the future as the company is looking for every possible avenue to generate greater sales. The company’s top line could gain from Fitness Equipment, outdoor apparel, Team Sports and private brands despite headwinds in the hunting, firearm and electronic categories.

Shares of Dicks Sporting Goods have opened and remained most of the day in the green territory during Monday’s trading session. The stock had surged about 34% in the past year and about 26% year-to-date.