Hibbett Sports Ests Too High

Hibbett Sports (HIBB - Analyst Report) operates sporting goods stores that are around 5,000 square feet in small to mid-sized markets in the Southeast, Mid-Atlantic and Midwest. The company's stores offer athletic equipment, footwear and apparel. Hibbett also operates Sports Additions stores, which are small, mall-based stores, as well as four Sports & Co. superstores.

We reiterate our Sell rating on Hibbett Sports. The company expects to earn $0.93-$1.03, which is below the consensus estimate of $1.05. We believe that consensus estimates are too high and will need to decline in the weeks ahead. That's because the difficult consumer spending environment will continue to pressure the company's earnings well into 2009.

In the first half of the year, Hibbett Sports' results looked pretty good, but its sales growth came at the expense of margins and its share repurchases also helped boost earnings per share. Our target price is $13, which is about 14x our fiscal 2009 EPS estimate and a slight discount to the company's long-term earnings growth rate.

Read the full analyst report on HIBB.