Outperform Stance on Hibbett

We have maintained our long-term ‘Outperform’ recommendation on Hibbett Sports, Inc. (HIBB - Analyst Report). Our recommendation is based on the company’s better-than-expected bottom-line performance in 9 back-to-back quarters and enhanced outlook for fiscal 2013.

Why Reiterate?

The company’s quarterly earnings have been outperforming the Zacks Consensus Estimate for the past 9 consecutive quarters with an average surprise of 9.3%. Hibbett’s most recently reported earnings of 71 cents per share for third-quarter of fiscal 2013, comfortably beat the Zacks Consensus Estimate of 68 cents and climbed 20% from the year-ago quarter earnings of 59 cents. The company’s bottom line was primarily benefitted from robust sales growth and operational efficiencies.

Boosted by strong business from back-to-school buyers, net sales escalated 9.6% year over year to $202.9 million and surpassed the Zacks Consensus Estimate of $201.0 million.

Buoyed by better-than-expected results, continued sales strength along with improved cost management and margins, the company raised its expectations for fiscal 2013. It now forecasts earnings in the range of $2.66–$2.71 per share, versus the prior guidance of $2.57–$2.67 per share. The current Zacks Consensus Estimate for the fiscal is pegged at $2.71 per share. Comparable store sales for the year are expected to increase in the mid-single digit range.

Apart from strong third-quarter results, Hibbett’s growth story looks compelling. We believe that the company’s sharp focus on expanding its store network in mid-sized and smaller markets, as well as better product mix are the key growth drivers.

Other Stocks to Consider

Currently, Hibbett holds Zacks Rank #4 (Sell) rating. However, other stocks in the industry that are worth considering include Big 5 Sporting Goods Corporation (BGFV - Analyst Report), Marinemax Inc. (HZO - Snapshot Report) and Five Below, Inc. (FIVE - Snapshot Report). All these stocks carry a Zacks Rank #2 (Buy).