DICK'S Sporting (DKS) Q1 Earnings Beat Estimates, Sales Rise Y/Y

DICK'S Sporting Goods, Inc. DKS posted impressive first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Sales also improved year over year. Despite the challenging macroeconomic environment, the company has been benefiting from its strategic efforts and continued market share gains. It is on track with business optimization to streamline the overall cost structure.  

DKS' shares have risen 8.2% in the past three months against the industry’s 7.1% decline.

Q1 in Detail

Adjusted earnings were $3.30 per share, down 3% from the year-ago figure of $3.40. However, the bottom line beat the Zacks Consensus Estimate of $2.94.

DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise

DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise

DICK'S Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICK'S Sporting Goods, Inc. Quote

Net sales of $3,018 million improved 6.2% year over year and surpassed the consensus estimate of $2,943 million. The upside can be attributed to comparable store sales (comps) and healthy transaction growth.

Consolidated comps grew 5.3% year over year. Also, the figure surpassed our estimate of 2.8% growth. This was driven by higher transactions and average tickets.

Gross profit rose 6.5% year over year to $1,095.3 million and came ahead of our estimate of $1,056.1 million. Meanwhile, the margin expanded 10 basis points (bps) year over year to 36.3%.

In the fiscal first quarter, the SG&A expense rate of 24.6% expanded 20 bps year over year. SG&A expenses, in dollar terms, increased 7.1% to $743.4 million and beat our estimate of $719.2 million.

Financial Aspects

DICK’S Sporting ended the fiscal first quarter with cash and cash equivalents of $1.6 billion and no outstanding borrowings under the revolving credit facility. Total inventory rose 6.7% year over year to $3.2 billion as of May 4, 2024.

The company repurchased 0.5 million shares under its share repurchase program for $113.6 million, of which $5.0 million was paid after the quarter. It had $665.9 million remaining under its authorization as of May 4.

On May 28, the company's board authorized and declared a quarterly cash dividend of $1.10 per share on its common stock and Class B common stock. The dividend is payable on Jun 28, to stockholders of record as of Jun 14, 2024.

As of May 4, net capital expenditure amounted to $126.2 million. DICK’S Sporting projects capital expenditure of $900 million on a gross basis and $800 million on a net basis for fiscal 2024.

Guidance

Management raised its fiscal 2024 guidance. It expects net sales to be in the range of $13.1-$13.2 billion.

DKS envisions adjusted earnings in the band of $13.35-$13.75 per share compared with our estimate of $13.14 and the earlier guided range of $12.85-$13.25. The adjusted earnings view assumes 83 million shares outstanding as of fiscal 2024. Also, this Zacks Rank #3 (Hold) company’s effective tax rate is expected to be 24%.

Store Update

In the reported quarter, the company opened one DICK'S House of Sport store. The total store count was 863, including 106 Golf Galaxy stores, seven Public Lands stores and 18 Going Going Gone! stores and other specialty concept stores, as of May 4.

Key Picks

We have highlighted three better-ranked stocks, namely Gap GPS, American Eagle AEO and Deckers DECK.

Gap, a leading apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). GPS delivered a trailing four-quarter average earnings surprise of 180.9%. You can see the complete list of today’s Zacks #1 Rank stocks here

The Zacks Consensus Estimate for Gap’s financial-year sales implies growth of 1.7% from the year-ago reported figure.

American Eagle, a casual apparel retailer, currently carries a Zacks Rank #2 (Buy). AEO delivered an earnings surprise of 22% in the last reported quarter.

The consensus estimate for American Eagle’s current financial-year sales implies growth of 3.4% from the year-ago reported figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered a trailing four-quarter average earnings surprise of 32.1%.

The Zacks Consensus Estimate for Deckers’ current financial-year sales implies growth of 15.8% from the year-ago reported figure.

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Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

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

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