Hibbett Poised to Outperform

We are maintaining our long-term Outperform recommendation on Hibbett Sports Inc. (HIBB - Analyst Report) with a target price of $52.00, based on the company's strong third-quarter 2012 results.

Moreover, the company has a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock.

Driven by strong operational efficiencies and performances in active wear, footwear and licensed apparels, Hibbett’s earnings for third-quarter 2012 surged approximately 34% to 59 cents per share. The quarterly earnings also beat the Zacks Consensus Estimate of 51 cents per share.

Buoyed by better-than-expected quarterly performance, the company raised its current fiscal earnings guidance range to between $2.05 and $2.11 from its earlier projection of $1.90 to $2.00. The current Zacks Consensus Estimate stands at $2.12 per share, which is above the company’s guidance range. HIBB also expects mid single-digit growth in comparable sales.

Hibbett Sports operates sporting goods stores in small to mid-sized markets in the Southeast, Mid-Atlantic, and lower Midwest regions of the U.S. Hibbett is strongly focused toward small towns and counties with population of 25,000 to 75,000.

We believe that the company has created a niche market for itself by strategically aligning its merchandise to regional/local sporting and community interests, which in turn, has given it a competitive edge over larger rivals, such as Dick's Sporting Goods Inc. (DKS - Snapshot Report) and Big 5 Sporting Goods Corporation (BGFV - Analyst Report).

Furthermore, we believe Hibbett’s continued focus on expanding its store count will boost its top line going forward. The company has planned to augment its network by approximately 51 to 53 new stores during the fiscal year ending January 31, 2012. Furthermore, Hibbett’s management has already identified 350 to 375 locations for future stores and recently ramped up its distribution center to support over 1,200 stores from 1,000 stores earlier.

In addition, the company has a healthy debt-free balance sheet coupled with full availability under its $80 million unsecured credit facilities. This offers Hibbett the financial flexibility to drive future top-line expansion.

Above all, the company offers an extensive selection of quality branded merchandise that emphasizes team sports designed to appeal to a wide range of customers within each individual market. This provides a significant upside potential to the company.

Read the full analyst report on HIBB

Read the full analyst report on BGFV

Read the full analyst report on DKS