Analyst Note| David Swartz |
Shaking off the threat of slowing consumer spending due to inflation, Dick's Sporting Goods beat our negative 1.5% same-store sales estimate by recording a 6.5% increase in 2022's third quarter. As this result came on top of strong comparable sales growth in each of the previous three October-ending quarters, we view it as further affirmation that the firm's merchandising, pricing, and marketing efforts are scoring. Although we rate Dick's as a no-moat company due to the high competition in the sporting goods retail space, we view it as a strong operator with solid relationships with wide-moat Nike and other key vendors. Dick's shares moved up by a mid-single-digit percentage on the earnings report, and we expect to lift our $78 fair value estimate by a similar amount. However, we view shares as overvalued.