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Bull of the Day: Dick's Sporting Goods (DKS)

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Dick’s Sporting Goods Inc. (DKS - Free Report) is a popular, well-known retailer where customers can find a wide range of sporting goods products: athletic shoes; fitness apparel and accessories; and a broad selection of outdoor and athletic equipment for team sports, camping, fishing, tennis, golf, and water sports.

Q1 Earnings Recap

Back in May, DKS reported better-than-expected first quarter results, impressing Wall Street across the board.

Net sales soared 119% year-over-year (and up 58% compared to Q1 2019) to $2.92 billion and adjusted earnings of $3.79 per share easily beat the consensus estimate.

Overall, Dick’s continued to see strength online and in its brick-and-mortar stores. Consolidated same-store sales increased 115% year-over-year, which includes e-commerce growth of 14%. The company’s online business has grown from 13% of total net sales in Q1 2019 to 20% in the last quarter.

CEO Edward Stack said in a statement that “We are in a great lane right now, and 2021 will be our boldest and most transformational year in the company's history. We believe the future of retail is experiential, powered by technology and a world-class omni-channel operating model.”

DKS ended the quarter with roughly $1.86 billion in cash and cash equivalents. The retailer also announced that it plans to repurchase a minimum of $200 million, or more than 2.2%, of its common stock this year.

Investors cheered all the good news that day, sending shares up over 16%.

DKS is Surging

DICKS Sporting Goods, Inc. Price and Consensus

Year-to-date, shares of Dick’s have climbed 82.8% compared to the S&P 500’s gain of 17.2%. Estimates have been rising too, and DKS is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, three analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $7.84 per share to $8.92 per share. Earnings are expected see double-digit growth for fiscal 2021, increasing more than 45%.

Like fellow sports and outdoor recreational retailers, DKS saw a sales boom during the pandemic as people stuck at home looked to spend more and more time outside. The company benefitted from social distancing as well, as outdoor activities allowed people to safely spend time with their loved ones.

Looking ahead, Dick’s Sporting Goods has plans to invest in technology that will make its shopping experience even better for customers, and the record revenue generated in 2020 shows investors and analysts that it has the ability to sustain business growth during periods of economic uncertainty.

Even more, Dick’s has a solid dividend that yields 1.4% on an annual basis.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep DKS on your shortlist.

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