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Here's Why DICK'S Sporting (DKS) Looks Poised for Growth
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DICK’S Sporting Goods, Inc. (DKS - Free Report) appears to be a lucrative pick with solid growth prospects. The company has been in investors’ good books, owing to a favorable shift in consumer behavior to a healthy lifestyle and robust store initiatives. It is currently witnessing growth on a two-year basis, driven by sales normalization in certain categories.
The company boasts a robust surprise trend, which continued in second-quarter fiscal 2022. In the quarter, its top and bottom lines surpassed the Zacks Consensus Estimate. This marked the ninth straight quarter of earnings and sales beat. Although both metrics fell year over year, DKS witnessed growth on a two-year basis, driven by strength in its core strategies.
Its comps rose 40% from second-quarter fiscal 2019. The company’s merchandise margin rate improved 439 bps from the second-quarter fiscal 2019 level on differentiated product assortments, disciplined pricing strategies and a favorable product mix.
On the store front, DICK’S Sporting’s earlier-launched DICK'S House of Sport, Golf Galaxy Performance Center, Public Lands, and Going, Going, Gone! have been performing well. As a result, it launched its third House of Sport store in Minnetonka, MN. Earlier, it opened two concept stores, namely OVERTIME by DICK’S Sporting Goods and DICK’S Sporting Goods Warehouse. The move was in sync with its plans to expand outlet and clearance stores to offer popular athletic brands at discounted prices.
The two Golf Galaxy performance centers, featuring TrackMan and BioMech golf technologies, are also performing well. The company launched two Public Lands stores in Pittsburgh and Columbus. In fiscal 2022, management revealed plans to open four DICK’S Sporting Goods stores and seven specialty concept stores. It also revealed plans to remodel 11 stores, including one House of Sport and one Golf Galaxy Performance Center.
As part of the holiday season prep, DICK’S Sporting is leaving no stone unturned to capitalize on any surge in demand. As a result, it has unveiled hiring plans for the holiday season. The company announced the recruitment of up to 9,000 seasonal workers for its DICK'S Sporting Goods, Public Lands, Field & Stream, and Going, Going, Gone! stores.
Driven by favorable customer demand, a solid product portfolio and strength in stores, management raised the guidance for fiscal 2022. For fiscal 2022, the company expects comps between negative 6% and negative 2% compared with the negative 8% to negative 2% stated earlier. It envisions adjusted earnings of $10.00-$12.00 per share versus the prior mentioned $9.15-$11.70.
The company anticipates GAAP earnings per share of $8.85-$10.55 for fiscal 2022 compared with the $7.95-$10.15 mentioned earlier. Its GAAP earnings view does not include share repurchases beyond the $360-million repurchase in the first half of fiscal 2022. The company expects an EBT (pre-tax income) margin of 10.7% at the mid-point for fiscal 2022, suggesting double the 2019 rate. Going forward, the company expects the merchandise margin rate to be meaningfully higher than pre-COVID levels on an annual basis.
Image Source: Zacks Investment Research
Consequently, this Zacks Rank #2 (Buy) stock gained 29.4% in the past three months compared with the industry’s growth of 5.9%.
Wrapping Up
Given the aforementioned strengths, DKS looks well-placed despite higher supply-chain-related costs and inflation woes. Notably, a long-term earnings growth rate of 5% and a VGM Score of A raise optimism in the stock. Also, the Zacks Consensus earnings estimates for fiscal 2022 have moved up 6% in the past 60 days.
Ulta Beauty, a retailer of beauty products, currently sports a Zacks Rank #1 (Strong Buy). ULTA has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 11.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Kroger, a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an expected EPS growth rate of 11.7% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 9.8%, respectively, from the year-ago reported figure. KR has a trailing four-quarter earnings surprise of 15.7%, on average.
Dillard's, which operates retail department stores, currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of nearly 215%, on average.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of 6% from the year-ago period’s reported figure. DDS has an expected EPS growth rate of 14.6% for three to five years.
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Here's Why DICK'S Sporting (DKS) Looks Poised for Growth
DICK’S Sporting Goods, Inc. (DKS - Free Report) appears to be a lucrative pick with solid growth prospects. The company has been in investors’ good books, owing to a favorable shift in consumer behavior to a healthy lifestyle and robust store initiatives. It is currently witnessing growth on a two-year basis, driven by sales normalization in certain categories.
The company boasts a robust surprise trend, which continued in second-quarter fiscal 2022. In the quarter, its top and bottom lines surpassed the Zacks Consensus Estimate. This marked the ninth straight quarter of earnings and sales beat. Although both metrics fell year over year, DKS witnessed growth on a two-year basis, driven by strength in its core strategies.
Its comps rose 40% from second-quarter fiscal 2019. The company’s merchandise margin rate improved 439 bps from the second-quarter fiscal 2019 level on differentiated product assortments, disciplined pricing strategies and a favorable product mix.
On the store front, DICK’S Sporting’s earlier-launched DICK'S House of Sport, Golf Galaxy Performance Center, Public Lands, and Going, Going, Gone! have been performing well. As a result, it launched its third House of Sport store in Minnetonka, MN. Earlier, it opened two concept stores, namely OVERTIME by DICK’S Sporting Goods and DICK’S Sporting Goods Warehouse. The move was in sync with its plans to expand outlet and clearance stores to offer popular athletic brands at discounted prices.
The two Golf Galaxy performance centers, featuring TrackMan and BioMech golf technologies, are also performing well. The company launched two Public Lands stores in Pittsburgh and Columbus. In fiscal 2022, management revealed plans to open four DICK’S Sporting Goods stores and seven specialty concept stores. It also revealed plans to remodel 11 stores, including one House of Sport and one Golf Galaxy Performance Center.
As part of the holiday season prep, DICK’S Sporting is leaving no stone unturned to capitalize on any surge in demand. As a result, it has unveiled hiring plans for the holiday season. The company announced the recruitment of up to 9,000 seasonal workers for its DICK'S Sporting Goods, Public Lands, Field & Stream, and Going, Going, Gone! stores.
Driven by favorable customer demand, a solid product portfolio and strength in stores, management raised the guidance for fiscal 2022. For fiscal 2022, the company expects comps between negative 6% and negative 2% compared with the negative 8% to negative 2% stated earlier. It envisions adjusted earnings of $10.00-$12.00 per share versus the prior mentioned $9.15-$11.70.
The company anticipates GAAP earnings per share of $8.85-$10.55 for fiscal 2022 compared with the $7.95-$10.15 mentioned earlier. Its GAAP earnings view does not include share repurchases beyond the $360-million repurchase in the first half of fiscal 2022. The company expects an EBT (pre-tax income) margin of 10.7% at the mid-point for fiscal 2022, suggesting double the 2019 rate. Going forward, the company expects the merchandise margin rate to be meaningfully higher than pre-COVID levels on an annual basis.
Image Source: Zacks Investment Research
Consequently, this Zacks Rank #2 (Buy) stock gained 29.4% in the past three months compared with the industry’s growth of 5.9%.
Wrapping Up
Given the aforementioned strengths, DKS looks well-placed despite higher supply-chain-related costs and inflation woes. Notably, a long-term earnings growth rate of 5% and a VGM Score of A raise optimism in the stock. Also, the Zacks Consensus earnings estimates for fiscal 2022 have moved up 6% in the past 60 days.
Other Stocks to Consider
Here are three other top-ranked stocks to consider — Kroger (KR - Free Report) , Dillard’s (DDS - Free Report) and Ulta Beauty (ULTA - Free Report) .
Ulta Beauty, a retailer of beauty products, currently sports a Zacks Rank #1 (Strong Buy). ULTA has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 11.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Kroger, a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an expected EPS growth rate of 11.7% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 9.8%, respectively, from the year-ago reported figure. KR has a trailing four-quarter earnings surprise of 15.7%, on average.
Dillard's, which operates retail department stores, currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of nearly 215%, on average.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of 6% from the year-ago period’s reported figure. DDS has an expected EPS growth rate of 14.6% for three to five years.