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Sporting goods store chain retailer, Hibbett Sports, Inc. (HIBB - Analyst Report) remains on our Neutral list with a target price of $59.00.

Why Reiterate?

Hibbett is strongly focused on small towns and counties with population ranging from 25,000 to 75,000. It serves a niche market by strategically designing its merchandise to cater to regional/local sporting and community interests.

From its earnings surprise history, we see that Hibbett has beaten the Zacks Consensus Estimate 3 times in the trailing 4 quarters, with an average positive surprise of 1.1%. The recently posted earnings of 40 cents per share for second-quarter fiscal 2014 beat the Zacks Consensus Estimate of 38 cents, consequently resulting in a surprise of 5.3%. Moreover, quarterly earnings rose nearly 33.3% year over year, primarily driven by top-line growth of 12.6%.

Hibbett now expects fiscal 2014 earnings per share to come in the range of $2.65–$2.77. Currently, the Zacks Consensus Estimate is $2.76 per share. We remain constructive on the stock, given Hibbett’s strong operating performance over the past several quarters. We expect the company to continue posting earnings as well as revenue growth in the coming quarters.

Moreover, we remain impressed with Hibbett’s store expansion program. The company plans to widen its network by adding approximately 70 to 75 stores during fiscal 2014. Furthermore, management has already identified over 400 locations for future stores and has ramped up its distribution centers to support over 1,200 stores from the earlier figure of 1,000 stores. We believe that the strategy of expanding store base provides a strong upside potential to the company.

Additionally, we believe that the strategy of doubling the size of its distribution facility will bolster growth in mid-sized and smaller markets, on which the company is focusing.

However, we remain slightly apprehensive about Hibbett’s growth prospects as its competitor and leading sporting goods retailer, DICK’S Sporting Goods Inc. (DKS - Analyst Report), has decided to enter smaller and mid-sized markets. We believe that DICK’S strategy will heighten competition and pose challenges to Hibbett’s retail space acquisitions. This may increase Hibbett’s store occupancy costs and operating expenses. Therefore, at present, Hibbett carries a Zacks Rank #3 (Hold).

Other Stocks Worth Considering

Other stocks that are worth a look in the sporting goods retail industry include Five Below, Inc. (FIVE - Snapshot Report) and Cabela’s Inc. (CAB - Analyst Report). Both of these have a Zacks Rank #2 (Buy).

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