A month has gone by since the last earnings report for Hibbett Sports, Inc.HIBB . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hibbett Q4 Earnings & Sales In Line, View Cut
Hibbett's earnings per share of $0.54 in fourth-quarter fiscal 2017 plunged 28.9% year over year, while coming in line with the Zacks Consensus Estimate. The year-over-year decline in the bottom line could be partly attributable to increased costs, which also weighed upon margins.
Net sales inched up 0.5% to $246.9 million, almost meeting our estimates. However, comparable-store sales (comps) dipped 2.2%, hurt by soft traffic during the holiday season. Further, comps were marred by softness noted across the apparel and equipment businesses, somewhat compensated by continued strength in Hibbett's footwear business - that witnessed a mid-single digit rise in comps.
Hibbett's gross profit fell 4.6% to $81.5 million, while gross margin contracted 180 basis points (bps) to 33%. The decline in margin was due to unfavorable markdowns and product mix, along with logistics and store occupancy cost deleverage.
Further, the operating income tumbled 30.7% to $19.1 million, while operating margin contracted 350 bps to 7.7%, mainly due to higher store operating, selling and administrative expenses (also as a percentage of sales). The escalated expenses stemmed from reduced comps and incremental costs associated with the company's omni-channel initiatives.
Other Financial Aspects
Hibbett ended the year with nearly $39 million in cash and cash equivalents, no outstanding bank debt and total availability under credit facilities worth $80 million. Total shareholders' investment, as of Jan 28, was roughly $334.0 million.
The company's capital expenditure was $10.2 million in the fourth quarter, while the same for fiscal 2017 amounted to $29.8 million. For fiscal 2018, the company expects capital expenditure in a range of $25-$35 million.
Hibbett repurchased 342,200 million shares worth $11.4 million during the fourth quarter, following which it had shares worth roughly $257.9 million remaining under its $300 million standing authorization, as of Jan 28. In fiscal 2018, management targets buybacks worth $45-$55 million.
In fiscal 2017, Hibbett introduced 65 stores, expanded eight high-performing stores and shut down 31 underperforming ones. As a result, it ended the year with 1,078 stores across 35 states.
For fiscal 2018, the company plans to open 50-60 new stores, while closing 25-35 stores.
While management wasn't very pleased with fourth-quarter performance, it remains focused on strategic growth efforts, which are expected to boost the top line from fiscal 2018 onward. In this regard, the company's store-to-home capacity is slated to be rolled out in first-quarter fiscal 2018. Further, the company is on track to launch its eCommerce site in the second half of the fiscal. These endeavors are likely to enrich customers' experience, thus placing Hibbett well for long-term growth.
That said, the company provided its fiscal 2018 outlook, where it expects comps to grow in a low-single digit range. Further, management anticipates gross margin to remain flat with fiscal 2017.
Finally, for fiscal 2018, which will have an additional week, the company expects earnings to range from $2.65-$2.85 per share. Further, management's guidance includes an adverse impact of about $0.03-$0.04 per share from Hibbett's omni-channel investments, which is expected to lead to SG&A expenses deleverage in fiscal 2018. However, this is likely to be partly countered by increased revenues and other cost savings.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two upward revisions for the current quarter compared to two downward.
Hibbett Sports, Inc. Price and Consensus
At this time, Hibbett's stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.