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Strategic Efforts to Aid DICK'S Sporting (DKS) Amid Cost Woes
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DICK’S Sporting Goods Inc. (DKS - Free Report) has been benefiting from a compelling assortment and sales normalization in certain categories. This led to impressive third-quarter fiscal 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. This marked the 10th straight quarter of an earnings and sales beat.
Net sales of $2,959 million improved 7.7% year over year and 50.8% from third-quarter fiscal 2019, driven by strength in its core strategies. Consolidated comparable store sales (comps) grew 6.5% year over year. Also, DKS witnessed comps growth of 23.2% and 6% on a 2-year stack basis and a 3-year basis, respectively, in the fiscal third quarter.
Consequently, this Zacks Rank #3 (Hold) stock has gained 10.9% in a year against the industry’s decline of 15.8%.
Image Source: Zacks Investment Research
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, DICK’S Sporting had opened two types of concept stores, namely OVERTIME by DICK’S Sporting Goods and DICK’S Sporting Goods Warehouse. The move is in sync with its plans to expand outlet and clearance stores in a bid to offer popular athletic brands at discounted prices.
The two Golf Galaxy performance centers, featuring TrackMan and BioMech golf technologies, have also been performing well. The company launched two Public Lands stores in Pittsburgh and Columbus.
In fiscal 2022, management had earlier revealed plans to open four DICK’S Sporting Goods stores and seven specialty concept stores. It also shared plans to remodel 11 stores, including one House of Sport and one Golf Galaxy Performance Center.
Driven by these factors, management raised its fiscal 2022 view. For fiscal 2022, the company expects comps to be negative 1.5-3%, which compares favorably with the earlier mentioned range between negative 6% and negative 2%. The view is also in sync with our comps estimate of negative 2.2%.
The company envisions adjusted earnings of $11.50-$12.10 per share versus the prior mentioned $10.00-$12.00. The view is in sync with our estimate of $11.79. The adjusted earnings view assumes 88 million shares outstanding as of fiscal 2022.
DICK’s Sporting anticipates GAAP earnings per share of $10.5-$11.1, in sync with our estimate of 10.59. The view compares favorably with the $8.85-$10.55 per share mentioned earlier. The revised view assumes shares outstanding of 99 million as of fiscal 2022.
However, the company continues to reel under high promotional activity to support its growth strategies. As a result, the gross margin contracted 423 basis points year over year to 34.2% in the fiscal third quarter due to high promotional activity.
Also, SG&A expenses increased 7.6% to $679.7 million, driven by continued investment in hourly wage rates and talent to support its growth strategies. Owing to the dismal gross margin and higher operating expenses, fiscal third-quarter adjusted earnings of $2.60 per share declined 18% from the prior-year figure of $3.19.
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 Value Score of A raise optimism in the stock. Also, the Zacks Consensus Estimate for fiscal 2022 earnings has moved up 4.3% in the past 30 days.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1 (Strong Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Tecnoglass, manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.
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Strategic Efforts to Aid DICK'S Sporting (DKS) Amid Cost Woes
DICK’S Sporting Goods Inc. (DKS - Free Report) has been benefiting from a compelling assortment and sales normalization in certain categories. This led to impressive third-quarter fiscal 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. This marked the 10th straight quarter of an earnings and sales beat.
Net sales of $2,959 million improved 7.7% year over year and 50.8% from third-quarter fiscal 2019, driven by strength in its core strategies. Consolidated comparable store sales (comps) grew 6.5% year over year. Also, DKS witnessed comps growth of 23.2% and 6% on a 2-year stack basis and a 3-year basis, respectively, in the fiscal third quarter.
Consequently, this Zacks Rank #3 (Hold) stock has gained 10.9% in a year against the industry’s decline of 15.8%.
Image Source: Zacks Investment Research
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, DICK’S Sporting had opened two types of concept stores, namely OVERTIME by DICK’S Sporting Goods and DICK’S Sporting Goods Warehouse. The move is in sync with its plans to expand outlet and clearance stores in a bid to offer popular athletic brands at discounted prices.
The two Golf Galaxy performance centers, featuring TrackMan and BioMech golf technologies, have also been performing well. The company launched two Public Lands stores in Pittsburgh and Columbus.
In fiscal 2022, management had earlier revealed plans to open four DICK’S Sporting Goods stores and seven specialty concept stores. It also shared plans to remodel 11 stores, including one House of Sport and one Golf Galaxy Performance Center.
Driven by these factors, management raised its fiscal 2022 view. For fiscal 2022, the company expects comps to be negative 1.5-3%, which compares favorably with the earlier mentioned range between negative 6% and negative 2%. The view is also in sync with our comps estimate of negative 2.2%.
The company envisions adjusted earnings of $11.50-$12.10 per share versus the prior mentioned $10.00-$12.00. The view is in sync with our estimate of $11.79. The adjusted earnings view assumes 88 million shares outstanding as of fiscal 2022.
DICK’s Sporting anticipates GAAP earnings per share of $10.5-$11.1, in sync with our estimate of 10.59. The view compares favorably with the $8.85-$10.55 per share mentioned earlier. The revised view assumes shares outstanding of 99 million as of fiscal 2022.
However, the company continues to reel under high promotional activity to support its growth strategies. As a result, the gross margin contracted 423 basis points year over year to 34.2% in the fiscal third quarter due to high promotional activity.
Also, SG&A expenses increased 7.6% to $679.7 million, driven by continued investment in hourly wage rates and talent to support its growth strategies. Owing to the dismal gross margin and higher operating expenses, fiscal third-quarter adjusted earnings of $2.60 per share declined 18% from the prior-year figure of $3.19.
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 Value Score of A raise optimism in the stock. Also, the Zacks Consensus Estimate for fiscal 2022 earnings has moved up 4.3% in the past 30 days.
Stocks to Consider
Here are three better-ranked stocks to consider, namely Ross Stores (ROST - Free Report) , Technoglass (TGLS - Free Report) and Wingstop (WING - Free Report) .
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1 (Strong Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Tecnoglass, manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2 (Buy). WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.