Dick’s Sporting Goods reports Q1 earnings May 30

What's Happening

Athletic goods and apparel retailer Dick's Sporting Goods ( DKS ) is scheduled to report its first-quarter results May 30. Look for the report before the market open, with the consensus calling for earnings of $0.42 for the quarter. During the same period last year the company earned $0.54 per share, and the stock has risen 3.8% on the year.

Technical Analysis

DKS was recently trading at $30.60, down $12.16 from its 12-month high and $6.72 above its 12-month low. Overall technical indicators for DKS are neutral with a weak downward trend. The stock has recent support above $30.00, and recent resistance below $33.00. Of the 23 analysts who cover the stock, nine rate it a "strong buy", 13 rate it a "hold", and one rates it a "strong sell". DKS gets a score of 39 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Dick's has been rather lackluster so far in 2018, and the company really needs to deliver a strong set of quarterly numbers for investors to rally back into the stock. The street does expect a strong report, with a whisper number of $0.47, versus the consensus $0.42. Last quarter the company was able to top estimates on the bottom line, but sales were weaker than expected, and the stock has trended lower since that report. The market is going to need to see positive surprises on both the top and bottom line, and comparable same store sales need to be positive. Last quarter, they were not. Dick's has done a good job growing its online business, and that will be in focus again for the recent quarter. Last quarter online sales accounted for roughly 19% of the company's total sales, which was a 17.9% year over year increase. While analysts would like to see stronger online gains, if it can maintain that level of online growth traders will see that as a positive. Analysts have a $34.65 price target on the stock.

Stock Only Trade

If you're looking to establish a long stock position in DKS, consider buying the stock under $30.50. Sell if it falls below $27.50 or take profits if it gets to $35.00.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a July 22/26 bull-put credit spread for a 40-cent credit. That's a potential 11.1% return (72.4% annualized*) and the stock would have to fall 13.7% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a July 35/40 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (56.7% annualized*) and the stock would have to rise 15.7% to cause a problem.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a July $30 covered call. Buy DKS shares (typically 100 shares, scale as appropriate), while selling the July $30 call for a debit of $28.20 per share. The trade has a target assigned return of 6.4%, and a target annualized return of 42.4% (for comparison purposes only).

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

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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