Thanks to concerns about continued gains in the housing market,
high oil prices, and still sluggish job growth, some are starting
to grow worried about the retail sector. Add in high levels of
competition, and a number of firms could be facing rough trading to
close out the year.
One such firm that may be in this camp is
Dick's Sporting Goods (
. Dick's is a mid-cap retailer specializing in sporting goods,
along with selling golf equipment, and hunting and fishing gear.
The Pennsylvania-based firm has expanded across the nation and is
now in 44 states operating over 500 locations.
Consumers have embraced the company over the long term, and DKS has
also seen solid returns in the YTD time frame. However, the company
is certainly prone to periods of high volatility, and with some of
the broad trends in the marketplace, this could definitely take
place in the tail end of 2013.
DKS in Focus
In addition to the broad trends in the market, investors
should note that the earnings estimate revision picture isn't that
great. Analysts have been scaling back their expectations for DKS
in both the short and long term, pushing down the EPS consensus for
In fact, 19 estimates have gone lower in the past 60 days for DKS,
while only four have gone up in the past month, when looking at the
full year time frame. This has pushed the consensus estimate for
the current year earnings of DKS down from $2.85/share 90 days ago,
to just $2.64 today.
Thanks to this, growth for DKS is expected to be just 4.3% for the
current year, a far cry from the industry average of 9.5%.
Meanwhile, for longer term growth (five years), the figure also
comes in below the industry average, while it is below what the
company saw in the trailing five years, suggesting growth at DKS is
These factors, along with a spotty history in earnings season, have
pushed DKS down to a Zacks Rank #5 (Strong Sell). This suggests
that trouble could be ahead for the company, and given how volatile
it is at earnings season, this might be a stock to avoid in the
If investors are dead-set on staying in the retail sector, you
should note that the industry currently has a poor Zacks Industry
Rank, easily in the bottom 25%. Still, there are some buy ranked
stocks worth considering in this space, especially when compared to
Five Below (
Ulta Salon Cosmetics & Fragrance (
all currently have Zacks Ranks of 2 (Buy). Plus, they have all seen
their ranks surge from 3 to 2 in the past week, suggesting now
might be the time to look to these names over DKS, at least in the
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