On Jul 17, 2013, we reiterated our long-term recommendation on
DICK's Sporting Goods Inc.
) at Neutral with a target price of $53.00. This was based on the
company's consistently strong quarterly results, robust outlook
and strategic growth initiatives. However, the stock remains
vulnerable to a sluggish economic recovery and a weak
Why the Reiteration?
DICK's Sporting's unique strategy of offering distinguished
merchandise, sourced from leading manufacturers, provides it with
a platform to better compete with other players.
Furthermore, the company leverages its strong vendor
relationships to source overstock and closeout merchandise at a
substantial discount, in order to boost gross margin and offer an
attractive value to customers.
We remain impressed by the company's growth initiatives, which
include expanding its store base and incorporating technological
advancements to serve its patrons better. The company leverages
an extensive network of stores to effectively penetrate into its
target markets, which in turn, enable it to generate healthy
sales and gain market share. Further, DICK's Sporting remains
focused on enriching the shopping experience for its customers.
DICK's Sporting is witnessing steady top- and bottom-line growth
as evident from its strong first-quarter fiscal 2013 results. The
company reported first quarter results with earnings and net
sales surging 6.7% and 4.1% to $0.48 per share and $1,333.7
million, respectively, primarily driven by new store openings,
enhanced e-Commerce capabilities and improved margins. Moreover,
the company has a history of beating the Zacks Consensus
Estimate. In the last 20 quarters, DICK's Sporting
surpassed the estimate 17 times with an average beat of 16.8%.
Looking ahead, DICK's Sporting reaffirmed fiscal 2013 earnings in
the range of $2.84-$2.86 per share. Moreover, the company
anticipates positive comps in the range of 2%-3% in fiscal 2013.
On the flip side, this Zacks Rank #3 (Hold) company is subject to
the sluggish economic recovery and limited consumer spending.
Moreover, the risk of sourcing merchandise from overseas markets
may hamper DICK's Sporting's performance.
Other Stocks to Consider
Apart from DICK's Sporting, other stocks worth a look in the
specialty retail sector include
Five Below, Inc.
Big 5 Sporting Goods Corp.
Build-A-Bear Workshop Inc.
). All of them carry a Zacks Rank #2 (Buy).
BUILD-A-BEAR WK (BBW): Free Stock Analysis
BIG 5 SPORTING (BGFV): Free Stock Analysis
DICKS SPRTG GDS (DKS): Free Stock Analysis
FIVE BELOW INC (FIVE): Free Stock Analysis
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