Bear of the Day: DICK's Sporting Goods (DKS)
DICK’s Sporting Goods DKS operates as an omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc.
The company is a current Zacks Rank #5 (Strong Sell), with EPS revisions remaining on a bearish trajectory over recent months.
Image Source: Zacks Investment Research
DKS Lowers Outlook
DICK’S Sporting Goods had a tough post-earnings reaction following its latest release after reporting adjusted EPS of $3.53 and revenue of $5.6 billion, with earnings sliding roughly 20% YoY alongside 53% YoY revenue growth. Both items fell short of our consensus estimates, with the company missing the Zacks Consensus EPS estimate by an average of roughly -3.5% across its last four releases.
While the YoY revenue surge looks appealing, it’s worth remembering that much of that growth reflects the addition of Foot Locker, which DKS acquired last September.
DICK’S business remained relatively solid, with comparable sales rising 4.9%, but Foot Locker proved to be a much bigger drag on the overall story. Comparable sales at Foot Locker fell 3.6%, as softer demand for older footwear styles, fewer major product launches, and a more promotional backdrop all weighed on performance.
That pressure also spilled into its outlook, leading management to cut its fiscal 2026 adjusted EPS outlook to a range of $11 to $12. Shares plunged after the guidance cut, with both annual and quarterly EPS estimates taking a huge hit following the release.
Shares are now down more than 30% YTD following the release, erasing several years of gains overall, now trading near levels we haven’t seen since late 2023 and early 2024.
Image Source: Zacks Investment Research
Bottom Line
Negative earnings estimate revisions stemming from a lowered outlook paint a challenging picture for the company’s shares in the near term.
DICK’s Sporting Goods DKS is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, the best idea would be to focus on stocks with a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
Of course, all our elite picks aren't winners, but this one could far surpass earlier Zacks' Stocks Set to Double like D-Wave Quantum, which shot up +680.1%.
Free: See Our Top Stock And 4 Runners UpDICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
