We issued an updated research report on
DICK'S Sporting Goods Inc.
) after the company's dismal first-quarter fiscal 2014 results
followed by a lowered fiscal 2014 guidance.
DICK'S Sporting's first-quarter fiscal 2014 adjusted earnings of
$0.50 per share not only missed its own guidance range of
$0.51-$0.52 but also came below the Zacks Consensus Estimate of
$0.53 per share. Net sales of $1,438.9 million also lagged the
Zacks Consensus Estimate of $1,459.0 million.
The dismal earnings was the outcome of unfavorable weather
conditions that turned the tables for the company's golf and
hunting businesses, both of which performed against expectations.
During the quarter, the golf business witnessed a significant
decline as opposed to an expectation of slight improvement while
the hunting business saw results fall greatly when compared with
the projection of a meager decline.
Furthermore, the company anticipates the golf business to perform
miserably throughout fiscal 2014 while the hunting business is
expected to stabilize only by year-end. These factors led to a
bleak outlook for fiscal 2014 and the upcoming quarter causing
estimates to roll down significantly.
For fiscal 2014, management now anticipates earnings per share to
be between $2.70 and $2.85, down from the previous forecast of
$3.03 and $3.08. Comparable store sales (comps) are now projected
to grow in the range of 1%-3% versus earlier anticipation of 3%-4%.
For the second quarter, DICK'S Sporting anticipates its earnings
per share to come in the range of $0.62-$0.67 on a non-GAAP basis.
On a GAAP basis, the company expects earnings of $0.67 per share.
Comps for the second quarter are expected to increase in the range
DICK'S Sporting has witnessed sharp downward estimate revisions for
the upcoming quarter as well as for fiscal 2014 and 2015, over the
last 30 days. The Zacks Consensus Estimate for second-quarter
fiscal 2014 declined 20.7% to 65 cents per share, while estimate
for fiscal 2014 fell nearly 10.0% to $2.78 per share over the last
30 days. For fiscal 2015 too, most of the estimates were revised
downward over the same time frame with the Zacks Consensus Estimate
falling 10.9% to $3.20 per share.
Moreover, the stock remains vulnerable to sluggish economic
recovery and cautious consumer spending. Also, risks of sourcing
merchandise from overseas markets may drag the company's results
Currently, DICK'S Sporting carries a Zacks Rank #5 (Strong Sell).
Key Picks from the Sector
Some better-ranked stocks worth considering in the sector include
Build-A-Bear Workshop Inc.
Office Depot Inc.
ULTA Salon, Cosmetics & Fragrance Inc.
). While Build-A-Bear Workshop sports a Zacks Rank #1 (Strong Buy),
Office Depot and ULTA Salon have a Zacks Rank #2 (Buy).
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