Skip to main content

The Market Has Dick’s Sporting Goods (NYSE:DKS) By The Shorts

Tuesday, March 9, 2021 | Thomas Hughes
The Market Has Dick’s Sporting Goods (NYSE:DKS) By The ShortsDick’s Is Growing But The Comps Are Getting Harder

There is a reality check going on in the market and Dick’s Sporting Goods (NYSE:DKS) is only another example. The later-reporting company’s, the ones whose Q4 seasons overlap the calendar Q1 period, are foreshadowing a lackluster Q1 reporting season. We know it’s still more than a month until the big banks kick off the peak of the season but it’s not too soon to be on alert. The good news is that the outlook for 2021 is good, the problem is that we’re on the cusp of really tough comps for the key pandemic plays and the comps are going to be tough. Dick’s Q1 2020 season will be easy to beat, revenue fell 31% that quarter, but the next three will not because the company has sustained a steady 20% YOY comp ever since.

"It's clear that our strategies over the past several years are working and have set us up for long-term success. As we enter 2021, our business has so much momentum, and we have been pleased with our start to the year. Our focus in 2021 will center around enhancing our existing strategies to accelerate our core and enable long-term growth,” says Lauren Hobart, CEO, and president of Dick’s Sporting Goods.

Dick’s Pandemic Gains Are Priced In

Dick’s Sporting Goods had a very good 4th quarter in which revenue accelerated from the previous and grew 19.9% from last year. The analysts were expecting closer to $3.07 billion so it is better than expected but a slim beat at best. On a comp basis, sales grew by 19.3% versus the 17.1% expected and is an acceleration from last year’s +5% gain. Comp’s were driven by eCommerce which grew 57% in the quarter to 32% of sales or up 700 basis points from last year. For the full year, eCommerce sales grew 100% and are a driving force of the company’s success. Our team can account for several bike helmets, some frisbees, and tennis balls among other items.

Bottom-line results were a little mixed but there is the re-amortization of some debt to factor in. At the GAAP level, EPS of $2.221 missed by $0.08 while the adjusted $2.24 beat by $0.12. Putting these figures in terms of growth, GAAP earnings are up 71% from last year and adjusted 66%. Dick’s Sporting Goods earnings got a boost from inventory drawdown during the quarter as well. The company reported inventory down -11.3% from last year which is good on several fronts. The company is carrying less baggage on the balance sheet for one and it can focus on higher-sales and margin items when it restocks.

Looking forward is where the problem is, at least for the early morning traders. The company is expecting to see its revenue in a range of -2% to +2% this year with a clear bias to the upside in our opinion. Not only are the pandemic tailwinds still blowing but there is the upcoming reopening and resumption of close activity ie gyms, school sports, organized athletics, etc to factor in.

We Love Dick’s Sporting Goods Dividend

Dick’s Sporting Goods is not one of the higher-yielding dividend stocks on our list of favorite dividend growth stocks but it is a payout to be coveted. The company is distributing about 20% of its earnings with a strong balance sheet, growing business, ample free cash flow, and a solid history of increases. The company has been increasing the payout for 6 years at an 18% CAGR and should be increasing it again with the next declaration. We expect it could be a big one.

The Technical Outlook: DKS Is Set Up To Buy

Shares of DKS got a boost in the prior session perhaps due to results from its near-competitor Hibbett Sports. Hibbett Sports reported a similar growth story and gave a similar outlook and its shares rocketed higher on the news. There is also the high 18% short-interest to consider, more than enough reason for any stock price to fall. Regardless, pre-session trading has price action down at the short-term EMA, if that level holds up and we think it will, share prices should recover fairly quickly due to short-covering if for no other reason. Longer-term, Dick’s Sporting Goods growth, balance sheet, and dividend warrant a multiple much greater than 11X so we are expecting a significant increase in share prices.

The Market Has Dick’s Sporting Goods (NYSE:DKS) By The Shorts

Featured Article: Lock-Up Period Expiration

7 Electric Vehicle (EV) Stocks That Are Ready to Rebound

The electric vehicle (EV) sector was nearly as frothy as the “pandemic stocks” in 2020. It wasn’t that the EV sector was dormant during the Trump administration.

But, as the saying goes, elections have consequences. And Wall Street understands they can make money in any administration. And as a bet that Joe Biden would win the presidency, electric vehicle stocks soared.

For starters, the Biden administration has already said it will prioritize climate change like no administration ever has. And one way they are going to do that is to incentivize the production and purchase of electric vehicles.

And to take advantage of this shift towards electric vehicle stocks, many private companies raced to get in on the action. The preferred way for many of these companies to go public was via a Special Purpose Acquisition Company (SPAC). A SPAC is basically a shortcut to the traditional IPO process.

However, what goes up frequently goes down and since late February, EV stocks have been getting battered. But this is creating an opportunity because the electric vehicle is still supposed to see exceptional growth over the next five years.

To help you take advantage of this we’ve created this special presentation that includes seven stocks that appear to be ready to take the next leg up.

View the "7 Electric Vehicle (EV) Stocks That Are Ready to Rebound ".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
DICK'S Sporting Goods (DKS)2.1$83.40-4.8%1.74%20.54Hold$71.09
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.