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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 $70.00.

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.

The company’s earnings surprise history shows that it beat the Zacks Consensus Estimate 3 times in the trailing 4 quarters. The recently posted earnings of 66 cents per share for third-quarter fiscal 2014 surpassed the Zacks Consensus Estimate by a penny.

However, the reported figure declined 7% from the year-ago quarter earnings of 71 cents, mainly due to an 11 cents reduction resulting from a week shift in the fiscal year due to the 53rd week last year. During the quarter, an increase in sales was largely offset by higher expenses.

Buoyed by better-than-expected quarterly results, Hibbett raised the lower-end of its fiscal 2014 guidance range. The company now expects fiscal 2014 earnings per share to be between $2.68 and $2.77, as against the earlier guidance 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 72 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. We believe that the strategy of expanding the 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 Sporting’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

Some better-ranked retail stocks include Barnes & Noble, Inc. (BKS - Snapshot Report) and Marinemax Inc. (HZO - Snapshot Report). Both of these have a Zacks Rank #2 (Buy).

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