A month has gone by since the last earnings report for Hibbett Sports (
HIBB Quick Quote HIBB - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hibbett due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hibbett's Q3 Earnings Beat Estimates, Sales Rise Y/Y
Hibbett posted third-quarter fiscal 2021 results, wherein the bottom line surpassed the Zacks Consensus Estimate. Further, both top and bottom lines improved year over year. Results gained from improved traffic in stores and the website owing to pent-up customer demand. Moreover, management envisions solid momentum to continue through the rest of fiscal 2021.
Hibbett’s adjusted earnings came in at $1.45 per share, surging more than four-folds from 32 cents reported in the prior-year quarter. The figure also surpassed the Zacks Consensus Estimate of 41 cents.
Net sales increased 20.3% year over year to $331.4 million in the quarter under review. The uptick can be attributed to improved traffic in stores. Also, retained momentum in online sales and new customer acquisitions contributed to quarterly growth. E-commerce sales accounted for 13.2% of total sales in the fiscal third quarter. Moreover, digital sales surged 50.7%. Comparable store sales (comps) increased 21.2% in the quarter, driven by a rise in new customers, a shift in the timing of the back-to-school season and solid performance in apparel, accessories and footwear. Adjusted gross profit increased 41.4% to $126.3 million in the reported quarter. Moreover, adjusted gross margin expanded 570 basis points (bps) to 38.1%. Adjusted operating income was $32.7 million, reflecting a significant improvement from $6.9 million in the prior-year quarter. Moreover, adjusted operating margin rose 740 bps to 9.9% in the quarter under review. Meanwhile, adjusted store operating, selling and administrative (SG&A) expenses contracted 120 bps to 26%, as a percentage of sales, driven by higher sales. Other Financials
Hibbett ended the quarter with $177.7 million in cash and cash equivalents and $75 million available under its credit facilities. Total stockholders’ investment, as of Oct 31, was $373.2 million.
Further, Hibbett did not repurchase any shares and has $143.3 million remaining under its authorization for share repurchase through Jan 29, 2022. Capital expenditures came in at $8.3 million during the reported quarter. Store Update
In third-quarter fiscal 2021, the company did not open any store but rebranded two Hibbett stores to City Gear. However, it shut five underperforming outlets. Hence, it ended the quarter with 1,074 stores across 35 states.
Driven by pent-up customer demand, gains from new customers, rising online sales, robust vendor relationships and strength in athletic footwear, apparel and accessories both in-store and online, management has issued GAAP guidance for fourth-quarter fiscal 2021. Also, it doesn’t foresee any material difference between GAAP and non-GAPP figures.
The company expects comps growth of high-single to low-double digits. Moreover, gross margin is anticipated to expand nearly 380-400 basis points, while SG&A expenses are likely to increase roughly 40-60 bps. The bottom line is expected to be $1-$1.1 per share. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 85.09% due to these changes.
At this time, Hibbett has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Hibbett has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.