It is said that history repeats itself. Will this hold good for Hibbett Sports, Inc.’s (HIBB - Analyst Report) stock price and earnings history too? Well, let’s take a look at what has been driving this Zacks Rank #3 (Hold) company, whose shares have soared 34.3% on a year-to-date basis and 13.7% over the past one year.
What’s Up at Hibbett?
Hibbett has been strongly focused on small towns and counties, and it serves in a niche market by strategically aligning its merchandise to regional sporting and community interests. We believe that operations in small markets provide a competitive advantage to Hibbett over larger rivals due to less intense competition and lower operating costs.
Further, the company’s store expansion program seems to be on track, which along with its small market strategy, should be beneficial. Additionally, Hibbett is piloting its new store system, which will enable it to view its actual in-store inventory across all its stores and accordingly convert more sales. The company believes this is the beginning of its digital strategy, which will integrate its stores and digital presence with its customers.
Fueled by these growth initiatives, Hibbett was able to mark its fourth straight earnings beat in second-quarter fiscal 2017, wherein the bottom line was backed by solid sales growth and improved gross margins, along with continued gains from its merchandise initiatives. Further, the top line benefited from continued strength noted in the company’s footwear business, which in turn was backed by varied assortments, better allocation and strong stock levels.
Going forward, the company remains optimistic about its robust quarterly performance and progress related to strategic endeavors. Also, robust product assortments make management confident about the back-to-school selling season. This, along with a solid first-half performance, induced Hibbett to raise its fiscal 2017 earnings forecast, following which the Zacks Consensus Estimate for the fiscal inched up 0.7% to $3.01.
If this is not enough, take a look at Hibbett’s financial position, which not only reflects its debt-free status, but also highlights its shareholder-friendly moves. This was evident from the 620,455 shares bought back during second-quarter fiscal 2017 for about $21.4 million.
While Hibbett stands to be among the gainers, it faces competitive pressures, as other players are entering its market with omni-channel business operations. Though Hibbett started developing its omni-channel platform in fiscal 2015, the completion of all phases is anticipated no sooner than the end of fiscal 2018. Hence, the failure of this initiative may hurt the company’s overall performance.
Nevertheless, we believe that Hibbett’s robust fundamentals, financial strength and splendid earnings history, reflect its future potential. The company’s long-term EPS growth rate of 11.1% further underscores its solid prospects. So, let’s wait and see if these factors can keep the company firm against the challenges.
Until then, investors can count on better-ranked stocks in the same industry like Big 5 Sporting Goods Corp. (BGFV - Analyst Report) , Five Below, Inc. (FIVE - Snapshot Report) and Marinemax Inc. (HZO - Snapshot Report) , with a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Big 5 has a long-term EPS growth rate of 12%, and has seen positive estimate revisions for 2016, over the past 60 days.
Marinemax, with a solid long-term EPS growth rate of 30%, has outperformed earnings estimates consistently in the last four quarters, with an average beat of nearly 79%. Further, estimates for the current fiscal are witnessing an uptrend in the last 60 days.
Five Below has to its credit a spectacular earnings trend as the company hasn’t delivered a negative earnings surprise even once over the past 17 quarters. Moreover, its long-term EPS growth rate of 29.5% helps it stand strong against the industry.
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