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Hibbett's Strategies on Track: Should You Hold the Stock?
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A prudent investment decision involves buying stocks that offer solid prospects and selling those that appear risky. It is also advisable for investors to hold stocks which provide enough such reason, for the near term at least. Is Hibbett Sports, Inc. (HIBB - Free Report) , which has seen its stock price jump 18.2% year to date, one such stock? Let’s find out.
Hibbett has been gaining traction from its expansion strategies, impressive earnings history and healthy financial status.
The company has been focused on store expansion and expects to benefit from its small market strategy as it continues to strengthen its presence across the country. The company targets expansion in markets where the need is evident and which offer better potential for future growth.
Additionally, Hibbett is piloting its new store system, which will enable inspection of its actual in-store inventory across all its stores and accordingly generate more sales. The company believes this is the beginning of its digital strategy, which will integrate its stores and digital presence with its customers.
Moving to Hibbett’s financial status, we note that it flaunts a debt-free balance sheet, with no outstanding borrowings on its revolving credit facilities, as of Apr 30, 2016. This provides it with the financial flexibility to drive growth. The company’s ability to generate a strong operating cash flow allows it to execute long-term strategies such as store expansion, enhancing product and brand offerings, returning value to shareholders, and building operational infrastructure.
Backed by these factors, among others, the company’s earnings have outpaced the Zacks Consensus Estimate in three straight quarters now, by an average of 3.9%. In the first quarter of fiscal 2017, the bottom line was fuelled by strong sales, improved margins and lower costs, along with continued gains from its merchandise initiatives.
Hibbett also reiterated its fiscal 2017 guidance, anticipating continued growth in comparable sales as well as better margins, driven by its store and inventory management initiatives. We believe this Zacks Rank #3 (Hold) company’s impressive surprise history, along with its fiscal 2017 guidance, is an indication of its solid growth potential.
While the abovementioned factors bode well, Hibbett seems to be losing its share to competitors that are entering its market with omni-channel business operations. Also, seasonality of the company’s business exposes it to significant risks, if the peak seasons fail to deliver.
Stocks to Consider
One can take a look at better-ranked stocks in the same industry like KAR Auction Services, Inc. (KAR - Free Report) , Regis Corp. (RGS - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) . Each of these stocks currently carries a Zacks Rank #2 (Buy) and may be better selections at this time.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Hibbett's Strategies on Track: Should You Hold the Stock?
A prudent investment decision involves buying stocks that offer solid prospects and selling those that appear risky. It is also advisable for investors to hold stocks which provide enough such reason, for the near term at least. Is Hibbett Sports, Inc. (HIBB - Free Report) , which has seen its stock price jump 18.2% year to date, one such stock? Let’s find out.
Hibbett has been gaining traction from its expansion strategies, impressive earnings history and healthy financial status.
The company has been focused on store expansion and expects to benefit from its small market strategy as it continues to strengthen its presence across the country. The company targets expansion in markets where the need is evident and which offer better potential for future growth.
Additionally, Hibbett is piloting its new store system, which will enable inspection of its actual in-store inventory across all its stores and accordingly generate more sales. The company believes this is the beginning of its digital strategy, which will integrate its stores and digital presence with its customers.
Moving to Hibbett’s financial status, we note that it flaunts a debt-free balance sheet, with no outstanding borrowings on its revolving credit facilities, as of Apr 30, 2016. This provides it with the financial flexibility to drive growth. The company’s ability to generate a strong operating cash flow allows it to execute long-term strategies such as store expansion, enhancing product and brand offerings, returning value to shareholders, and building operational infrastructure.
Backed by these factors, among others, the company’s earnings have outpaced the Zacks Consensus Estimate in three straight quarters now, by an average of 3.9%. In the first quarter of fiscal 2017, the bottom line was fuelled by strong sales, improved margins and lower costs, along with continued gains from its merchandise initiatives.
Hibbett also reiterated its fiscal 2017 guidance, anticipating continued growth in comparable sales as well as better margins, driven by its store and inventory management initiatives. We believe this Zacks Rank #3 (Hold) company’s impressive surprise history, along with its fiscal 2017 guidance, is an indication of its solid growth potential.
While the abovementioned factors bode well, Hibbett seems to be losing its share to competitors that are entering its market with omni-channel business operations. Also, seasonality of the company’s business exposes it to significant risks, if the peak seasons fail to deliver.
Stocks to Consider
One can take a look at better-ranked stocks in the same industry like KAR Auction Services, Inc. (KAR - Free Report) , Regis Corp. (RGS - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) . Each of these stocks currently carries a Zacks Rank #2 (Buy) and may be better selections at this time.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>