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Dick's Sporting Goods Inc - Stock Quote DKS

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Morningstar's Dick's Sporting Goods Inc Stock Analysis

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No-Moat Dick’s Closes Incredible 2021 With Strong Momentum; Shares Overvalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Dick’s Sporting Goods wrapped up a terrific 2021 with fourth-quarter results that exceeded our estimates and its holiday sales pre-announcement of Jan. 6, 2022 (see our note of that date). Moreover, its 2022 adjusted EPS guidance of $11.70-$13.10 suggests a decline of only about 20% from 2021’s sky-high $15.70, smaller than the 40% drop we had anticipated. Thus, given this momentum and the rescission of our prior view of a hike in the U.S. corporate tax rate, we expect to lift our fair value estimate of $69 per share by nearly 10%. However, we view Dick’s shares, up a mid-single-digit percentage amount on the report, as overvalued. Although the firm has capitalized on favorable market conditions, we rate Dick’s as a no-moat firm due competition from many others, including its own vendors. For example, wide-moat Nike (17% of Dick’s 2021 sales) recently notified Foot Locker that it will pull back on shipments to focus on its own direct-to-consumer efforts. While we believe Dick’s has a strong relationship with Nike, the same has often been said of Foot Locker.

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Dick's Sporting Goods Inc's Company Profile

Business Description

Dick’s Sporting Goods retails athletic apparel, footwear, and equipment for sports. Dick’s operates digital platforms, about 730 stores under its namesake brand (including outlet stores), and about 130 specialty stores under the Golf Galaxy, Public Lands, and Field & Stream names. Dick’s carries private-label merchandise and national brands such as Nike, The North Face, Under Armour, Callaway Golf, and TaylorMade. Based in the Pittsburgh area, Dick’s was founded in 1948 by the father of current executive chairman and controlling shareholder Edward Stack.

345 Court Street
Coraopolis, PA, 15108
T +1 724 273-3400
Sector Consumer Cyclical
Industry Specialty Retail
Most Recent Earnings Jan 31, 2022
Fiscal Year End Jan 28, 2023
Stock Type Cyclical
Employees 50,800

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