Sporting goods store chain retailer,
Hibbett Sports, Inc.
) remains on our Neutral list with a target price of $70.00.
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.
The company's earnings surprise history shows that it beat the
Zacks Consensus Estimate 3 times in the trailing 4 quarters. The
recently posted earnings of 66 cents per share for third-quarter
fiscal 2014 surpassed the Zacks Consensus Estimate by a
However, the reported figure declined 7% from the year-ago
quarter earnings of 71 cents, mainly due to an 11 cents reduction
resulting from a week shift in the fiscal year due to the 53
week last year. During the quarter, an increase in sales was
largely offset by higher expenses.
Buoyed by better-than-expected quarterly results, Hibbett
raised the lower-end of its fiscal 2014 guidance range. The
company now expects fiscal 2014 earnings per share to be between
$2.68 and $2.77, as against the earlier guidance range of
$2.65-$2.77. Currently, the Zacks Consensus Estimate is $2.76 per
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 72 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. We believe that
the strategy of expanding the 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 Sporting'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
Some better-ranked retail stocks include
Barnes & Noble, Inc.
). Both of these have a Zacks Rank #2 (Buy).
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