Dick's Sporting Goods Inc.
) - a full-line sporting goods retailer - is expected to release
its third-quarter 2012 financial results on Tuesday, November 13,
The current Zacks Estimate for the company's earnings stands
at 37 cents, with a low of 36 cents and a high of 39 cents,
reflecting an increase of about 15.6% compared with the earnings
of 32 cents reported in the prior-year quarter. Revenue, as per
Zacks Consensus Estimate is pegged at $1,296.0 million.
Second Quarter Recap
Dick's Sporting's second-quarter 2012 adjusted earnings per
share surged 25% to 65 cents a share from the year-ago level of
52 cents a share, swaying past the company's guidance range of
62-63 cents per share. Earnings per share also modestly exceeded
the Zacks Consensus Estimate of 64 cents.
During the quarter, net sales grew 10% to $1,437.0 million
driven by a 3.8% rise in consolidated comparable-store sales
(comps) and opening of new stores. Total revenue also surpassed
the Zacks Consensus Estimate of $1,433 million.
The increase in comps was aided by a 2.9% rise in Dick's
Sporting's store sales, 4.4% increase in Golf Galaxy store sales
and a 34.6% growth in e-commerce business.
For the third quarter of fiscal 2012, Dick's Sporting expects
earnings per share of 36 cents, compared with the year-ago
earnings of 32 cents. Comps for the upcoming quarter are expected
to rise 4% against a 4.1% growth recorded in the last year.
Moreover, Dick's Sporting's plans to further expand its stores
network in the third quarter by opening 21 more Dick's Sporting
Goods stores and relocating 3 of these.
Agreement of Estimate Revisions
We observe only 1 estimate moving up for the to-be-reported
quarter (out of 24) as well as for the fiscal 2012 (out of 22)
over the last 30 days, whereas no revisions were made in the
opposite direction. Furthermore, no revisions were noticed in the
last 7 days for both third-quarter and fiscal 2012.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate remains unchanged mainly due to
no major revisions by the analysts', keeping the earnings per
share at 37 cents for the upcoming quarter over the last 7 and 30
days. Moreover, we observed the same for fiscal 2012, with the
Zacks Consensus Estimate stagnant at $2.53 per share over the
last 7 and 30 days.
Positive Earnings Surprise History
With respect to earnings surprise, Dick's Sporting has
surpassed the Zacks Consensus Estimate in three out of four
quarters, and met in one, with an average of 14.4%. Considering
the company's last quarter's performance, it can be stated that
Dick's Sporting will surpass the Zacks Consensus Estimate in the
upcoming quarters as well.
Neutral on Dick's
Pittsburgh-based Dick's Sporting Goods remains the dominant
player in the industry with significant store expansion and
potential share gain opportunities in the U.S. The company's
outlook for 2012 looks bright given the company's continued
investments in new stores and e-commerce business as well as in
practices that drive margin expansion including inventory
management, private brands, and product mix shift.
However, the sporting goods market is highly competitive in
nature and Dick's failure to compete effectively on the grounds
of price, quality or product will thwart its growth potential.
Moreover, a weak economy will likely continue to weigh on the
As a result, we maintain our long-term 'Neutral'
recommendation on the stock. However, Dick's Sporting Goods
currently has a short-term Zacks #2 Rank (Buy) for the next 1-3
months based on the company's positive earnings surprise in the
last two quarters.
One of the company's peers
Wal-Mart Stores Inc.
) is scheduled to release its third-quarter 2012 financial
results on Thursday, November 15, 2012.
DICKS SPRTG GDS (DKS): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
To read this article on Zacks.com click here.