Sporting goods retailer Dick's Sporting Goods ( DKS ) is scheduled to report its third-quarter results November 15. The company will report its quarterly numbers before the market open, with the consensus calling for earnings of $0.42 per share. The stock has been trending higher through the year, and shares are up 65.6% on the year.
DKS was recently trading at $58.53, down $3.41 from its 12-month high and $25.11 above its 12-month low. Overall technical indicators for DKS are bullish and the stock is in a strong upward trend. The stock has recent support above $55.75, and recent resistance below $60.60. Of the 25 analysts who cover the stock, 17 rate it a "strong buy", one rates it a "buy", and seven rate it a "hold". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.
DKS stock has been on fire in 2016, fueled in part by back-to-back positive quarterly reports. The stock really started moving higher over the summer months, but its valuation remains low enough to allow the stock to move higher on another earnings beat. Analysts are generally upbeat regarding the upcoming earnings report, setting a whisper number that is a penny above the consensus at $0.43. During the same period last year the company earned $0.45, so earnings are forecast to fall year over year, but the earnings drop for the quarter has already been priced into the stock, and should not result in a selloff as long as results are in-line or better than expected. Despite the drop for the recent quarter, analysts expect full year earnings growth of 6.3% this year, and then 22.0% growth next year, so there is still a lot upside potential for the stock barring any major negative news.
Stock Only Trade
If you want a bullish hedged trade on the stock, consider a January 45/50 bull-put credit spread for a 40-cent credit. That's a potential 8.7% return (45.3% annualized*) and the stock would have to fall 13.9% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider a January 65/67.50 bear-call credit spread for a $0.35 credit. That's a potential 16.3% return (84.9% annualized*) and the stock would have to rise 11.6% to cause a problem.
Covered Call Trade
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com