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Dick's Sporting Goods Inc DKS

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No-Moat Dick’s Sporting Goods Blasted Another Home Run in Q3; Shares Overvalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Once again, no-moat Dick’s Sporting Goods crushed our sales and margin expectations in 2021’s third quarter, as the resumption of team sports and the continuing popularity of activewear boosted results. Yet, its shares dropped by a mid-single-digit percentage on the report as its outlook suggests fourth-quarter sales will be roughly flat with last year (although still up about 20% over 2019). Realistically, Dick’s sales growth and earnings over the past few quarters have been far above normal levels, so a slowdown seems inevitable. For some context, Dick’s adjusted EPS of $3.19 in the third quarter was an increase of more than 500% over the $0.52 earned in the same 2019 period. Regardless, we expect to lift our $63 fair value estimate by a high-single-digit percentage on the outperformance, although we continue to view its shares as overvalued.

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Company Profile

Business Description

Dick’s Sporting Goods retails athletic apparel, footwear, and equipment for sports. Dick’s operates about 730 stores, warehouse stores, and about 125 specialty stores under the Golf Galaxy, Public Lands, and Field & Stream names. Dick’s also operates e-commerce sites including youth sports site Team Sports HQ. 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 Oct 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 50,100