Q4 Preview: Strong Outlook, e-Commerce Numbers Key Following Dick's (DKS) Preannouncement

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Shares of Dick's Sporting Goods ( DKS ) ended Monday's session about 0.1 percent better heading into the sporting retailer's fourth-quarter report, expected out before the market opens Tuesday. Volume on the move was notable Monday, coming in at about 150 percent stronger than normal.

The Street is currently looking for 15.8 percent of earnings growth to 88 cents per share with revenue of $1.61 billion.

Shares rose 6.8 percent in the quarter to end January at $41.10. The stock is up 24 percent for 2012 and finished 2011 just about flat. Shares of Dick's have traded within a range of $29.10 to $46.85 over the last year.

Data from Bloomberg has 16 analysts at Buy, seven with a Hold rating, and one at Sell. The Street's price target average is $49.50, ranging from $36 to $57.

Analyst Comments

  • Goldman Sachs sees earnings of 88 cents for the quarter. Though the firm is anticipating an anticlamatic report, Dick's outlook and report on business trends will remain critical.

    On guidance, Goldman believes the critical point will be how warmer weather impacted sales. An impact on gross margins is expected and Goldman is modeling about 10 basis points of expansion "with a steep expense decline against a very large cost accrual a year ago."

  • J.P. Morgan is modeling earnings of 88 cents per share. The firm still thinks there is plenty of top-line growth for Dick's with its continued focus on youth sports and healthy living trends. Innovation from sports clothing manufacturers Nike ( NKE ) and Under Armour ( UA ) is only adding to upside.

    JPMorgan said, "We expect DKS to add an incremental 30-40 NKE and UA shop in store setups in 2012 (on top of the >150 base). Additionally, share services footwear will be in all new stores with incremental growth planned from existing store conversions. From an online perspective, 2011 featured DKS upgrading the functionality of its website and adding dotcom kiosks in all of its stores. We expect ship to store capabilities in 2012 and ship from store enhancements in 2013. At only ~3% of sales, every ~30% increase in e-Commerce sales adds nearly 100 bps to same store sales. These in-store and online investments position DKS offensively and defensively in the category."

  • Deutsche Bank expects EPS of 88 cents, a 30 basis points gross margin gain, and a 0.5 percent decline in comps. Deutsche commented, "While we expect cost cutting to be a big part of the gain, we believe gross margin gains despite weakness in higher margin outerwear will speak to DKS's strong inventory controls and benefits of private label as well as mix shifts within categories. While comps have been below its peers, our analysis implies that comps within footwear and apparel have been in line. This means that the comp differential is a result of different mixes compared to the mall based footwear retailers."

    The firm said with the launch of Amazon's (Nasdaq: AMZN) Quidsi, strong news for Dick's e-Commerce site would be a positive catalyst.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Dicks' past performance at Streetinsider's Dicks' Income Statement .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: AMZN , DKS , NKE , UA

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