Here's Why You Should Invest in DICK'S Sporting (DKS) Stock

DICK'S Sporting Goods, Inc. DKS is well-poised to tap the positive trends in the sporting industry, thanks to its robust strategies including merchandising initiatives and store-related efforts. The company is gaining from brand strength and demand for its products that resonate well with customers. Undoubtedly, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing and efficiently controlling expenses.

Buoyed by such strengths, shares of this sporting goods dealer have increased 61% compared with the industry’s 21.4% growth in the six-month time frame. A Value Score of A further adds strength to this current Zacks Rank #2 (Buy) company.

Let’s Delve Deeper

On the storefront, DICK’S Sporting’s earlier launched DICK'S House of Sport, Golf Galaxy Performance Center, Public Lands and Going, Going, Gone! have been performing well. Earlier, it opened two types of concept stores namely OVERTIME by DICK’S Sporting Goods and DICK’S Sporting Goods Warehouse.

The company opened seven Golf Galaxy Performance Centers, thereby expanding its Golf Galaxy chain to 104 locations, including 13 performance centers. The total store count was 725, including 104 Golf Galaxy stores, seven Public Lands stores and 17 Going, Going, Gone! Stores.

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DKS plans to open other 10 House of Sport locations throughout 2024. By 2027, it expects 75 to 100 House of Sport stores nationwide. The company is anticipated to open seven Golf Galaxy performance centers this year. Dick’s Sporting also expects to grow its golf Galaxy footprint with 10 new locations.

DICK’S Sporting’s fiscal fourth-quarter fiscal 2023 results benefited from the solid growth efforts and continued market share gains. This led to a robust top-line performance. Net sales improved 7.8% year over year. Also, strong comparable store sales (comps) and healthy transaction growth acted as tailwinds. Consolidated comps grew 2.8% year over year, driven by higher transactions and average tickets. For fiscal 2024, the company expects comps growth in the range of 1-2%.

The company boasts a robust history of returning value to shareholders. It repurchased 5.4 million shares of its common stock for $648.6 million under its share repurchase program in fiscal 2023. As of Feb 3, 2024, it had $780 million remaining under its authorization. During the 53-week period that ended Feb 3, the company paid dividends of $351 million. Management hiked the annualized dividend to $4.40 per share, indicating an increase of 10% from the prior dividend. On Mar 13, the company’s board authorized and declared a quarterly dividend of $1.10 per share on the company's common stock and Class B common stock.

Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $13.2 billion and $13.27, respectively. These estimates show corresponding growth of 1.3% and 2.8% year over year. The consensus mark for next fiscal year’s sales and EPS is $13.7 billion and $14.33, respectively, reflecting a year-over-year increase of 4.1% and 8%.

Given all the positives, DICK’S Sporting stock seems to deserve a place in your investment portfolio.

Other Key Picks

We have highlighted other 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 an earnings surprise of 180.9% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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

The consensus estimate for American Eagle’s current financial-year sales suggests 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 an earnings surprise of 32.1% in the trailing four quarters.

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

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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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