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DICK'S Sporting (DKS) Q3 Earnings & Sales Beat, View Up

DICK'S Sporting Goods, Inc. DKS posted better-than-expected third-quarter fiscal 2021 results, wherein both top and bottom lines improved year over year. The results gained from customer demand and improved product assortment, which in turn led to strong sales and merchandise margin momentum. The company also remains on track with the transformational plan. It also noted that the company kickstarted the fiscal fourth quarter on a good note. Management raised its fiscal 2021 view.

Consequently, shares of this Zacks Rank #3 (Hold) company have gained 17% in the past three months, outperforming the industry’s 8.2% growth. Yet, DKS fell more than 3% during the pre-trading session on Nov 23. This might be due to industry-wide supply chain headwinds.

Quarter in Detail

For the fiscal third quarter, adjusted earnings were $3.19 per share, up 59% from the prior-year figure of $2.01. The figure surpassed the Zacks Consensus Estimate of $1.93 per share. The uptick can be attributable to solid sales and improved gross margins for the reported quarter. Adjusted earnings also surged more than sixfold from third-quarter fiscal 2019.

Net sales of $2,747.6 million grew 13.9% year over year and beat the Zacks Consensus Estimate of $2,467 million. The uptick can be attributable to improved store sales and a robust online show. Net sales also advanced 40% from third-quarter fiscal 2019.

Consolidated same-store sales (comps) advanced 12.2% compared with comps growth of 23.2% and 6% in third-quarter fiscal 2020 and third-quarter fiscal 2019, respectively.

E-commerce sales surged 97% from third-quarter fiscal 2019 and rose 1% year over year. E-commerce accounted for nearly 19% of net sales for the reported quarter, up from 13% in third-quarter fiscal 2019 and roughly 21% from third-quarter fiscal 2020.

Gross margin expanded 354 basis points (bps) year over year to 38.5% for the quarter under review, driven by robust sales and merchandise margins. SG&A expenses of 23%, as a percentage of sales, contracted 151 bps year over year and 410 bps from third-quarter fiscal 2019. The company incurred nearly $15 million of COVID-related safety costs for the nine months ended Oct 30, 2021.

Zacks Investment ResearchImage Source: Zacks Investment Research

Financial Aspects

DICK'S Sporting ended the reported quarter with cash and cash equivalents of $1,372.9 million, no borrowings under the $1.9-billion revolving credit facility, and total stockholders' equity of $2,530.8 million. Total inventory rose 7.3% year over year as of Oct 30, 2021.

For the nine months ended Oct 30, 2021, total capital expenditure amounted to $203.4 million. The company now projects capital expenditure of $370-$395 million, on a gross basis, for fiscal 2021.

The company has approved quarterly dividend of 43.75 cents per share on common stock and Class B common stock, which is likely to be paid out on Dec 29 to shareholders on record as of Dec 10. DICK’S Sporting paid more than $500 million in the form of dividends in the reported quarter.

It repurchased 2.17 million shares worth $125.8 million during the fiscal third quarter. Following this, the company has roughly $605.1 million under the existing authorization, which is valid till June 2024. It also projects share repurchase of at least $400 million for fiscal 2021.

Guidance

Driven by impressive quarterly results and a solid start to the fiscal fourth quarter, management raised its fiscal 2021 view. Fiscal 2021 sales are expected to be $12,120-$12,190 million, up from the previously mentioned $11,520-$11,720 million. Same-store sales are likely to grow 24-25%, up from the earlier projection of 18-20%. Adjusted earnings are now envisioned to be $14.6-$14.8, reflecting a sharp improvement from $12.45-$12.95 per share mentioned earlier.

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

Here's How Other Stocks Fared

We have highlighted three better-ranked stocks in the Retail - Wholesale sector, namely, Boot Barn Holdings BOOT, Tractor Supply Company TSCO and Costco COST.

Boot Barn Holdings — the lifestyle retailer of western and work-related footwear, apparel as well as accessories — sports a Zacks Rank #1 (Strong Buy). Shares of the company have rallied 48.5% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn Holdings’ sales and earnings per share (EPS) for the current financial year suggests growth of 54.4% and 183.3%, respectively, from the year-ago period. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.

Tractor Supply Company, a rural lifestyle retailer in the United States, currently carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of the company have gained 18.6% in the past three months.

The Zacks Consensus Estimate for Tractor Supply Company’s sales and EPS for the current financial year suggests growth of 19% and 23.9%, respectively, from the year-ago period. TSCO has an expected EPS growth rate of 9.6% for three-five years.

Costco, which operates membership warehouses, presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 7.7%, on average. Shares of the company have gained 19.6% in the past three months.

The Zacks Consensus Estimate for Costco’s sales and EPS for the current financial year suggests growth of 9.6% and 9.7%, respectively, from the year-ago period. COST has an expected EPS growth rate of 8.7% for three-five years.


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Tractor Supply Company (TSCO): 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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