Sporting goods store chain retailer,
Hibbett Sports, Inc.
) remains on our Neutral list with a target price of $59.00.
Hibbett is strongly focused on small towns and counties with
population ranging from 25,000 to 75,000. It serves a niche
market by strategically designing its merchandise to cater to
regional/local sporting and community interests.
From its earnings surprise history, we see that Hibbett has
beaten the Zacks Consensus Estimate 3 times in the trailing 4
quarters, with an average positive surprise of 1.1%. The recently
posted earnings of 40 cents per share for second-quarter fiscal
2014 beat the Zacks Consensus Estimate of 38 cents, consequently
resulting in a surprise of 5.3%. Moreover, quarterly earnings
rose nearly 33.3% year over year, primarily driven by top-line
growth of 12.6%.
Hibbett now expects fiscal 2014 earnings per share to come in
the range of $2.65-$2.77. Currently, the Zacks Consensus Estimate
is $2.76 per share. We remain constructive on the stock, given
Hibbett's strong operating performance over the past several
quarters. We expect the company to continue posting earnings as
well as revenue growth in the coming quarters.
Moreover, we remain impressed with Hibbett's store expansion
program. The company plans to widen its network by adding
approximately 70 to 75 stores during fiscal 2014. Furthermore,
management has already identified over 400 locations for future
stores and has ramped up its distribution centers to support over
1,200 stores from the earlier figure of 1,000 stores. We believe
that the strategy of expanding store base provides a strong
upside potential to the company.
Additionally, we believe that the strategy of doubling the
size of its distribution facility will bolster growth in
mid-sized and smaller markets, on which the company is
However, we remain slightly apprehensive about Hibbett's
growth prospects as its competitor and leading sporting goods
DICK'S Sporting Goods Inc.
), has decided to enter smaller and mid-sized markets. We believe
that DICK'S strategy will heighten competition and pose
challenges to Hibbett's retail space acquisitions. This may
increase Hibbett's store occupancy costs and operating expenses.
Therefore, at present, Hibbett carries a Zacks Rank #3
Other Stocks Worth Considering
Other stocks that are worth a look in the sporting goods
retail industry include
Five Below, Inc.
). Both of these have a Zacks Rank #2 (Buy).
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