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Dick's (DKS) Stock Sinks on Trade War Worries, Despite Q1 Beats

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Dick’s Sporting Goods (DKS - Free Report) experienced a rollercoaster of emotions Wednesday. It started off the day on a positive note as the firm surpassed estimates by 4 cents a share. Dick’s followed up this positive trend by raising its full-year outlook. CEO Ed Stack stated “same-store sales turned positive in March and stayed positive in April,” further boosting the confidence felt about the company. The company’s online sales also increased by 15% during the first quarter. The stock opened at $36.92 per share and the highest it reached was $37.00.

This positive outlook for the company soon took a negative turn as the trade war between the U.S and China began to play a role in the stock’s valuation. China’s biggest newspaper handed out an explicit warning targeting the U.S titled “United States, don’t underestimate China’s ability to strike back.” The article itself reiterated the advice to not underestimate China’s ability to retaliate by stating “Don’t say we didn’t warn you!” Investors should note that the People’s Daily has only ever used that statement twice before: right before China’s border war with India and in ahead of the country’s war with Vietnam.

The escalation of the trade war between the U.S and China has brought upon many doubts concerning Dick’s and the broader market. Shares dropped by 5.9% after the company warned that tariffs were not implemented in its 2019 earnings guidance. The company is still working to determine the full impact the tariffs will have. The retail industry as a whole has a lot at stake during these uncertain times and their shares will likely be impacted by the way the trade war develops.

Dick’s surpassed quarterly expectations and seems to be headed in a positive direction if all else holds up. The sporting goods retailer’s sales increased, providing an unforeseen boost to the company. But the outcome of the current political situations must be taken into consideration when predicting the company’s future. Despite the spike in shares at the start of the day, DSK stock closed the day down 5.9% at $33.67 per share. Dick’s is currently a Zacks Rank #3 (Hold).

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