Dicks Sporting Goods Is Investing To Win The Long-Term Game

Even as retail continues to get crushed, Dicks Sporting Goods Inc DKS is still looking to remain a dominate player in the sporting goods retail sector.

After meeting with Dick’s' management team, Credit Suisse analyst Seth Sigman believes in Dick’s current business plan, as he maintained his Neutral rating and $55 price target.

“We believe the company is doing some very positive things to transition its model, add new layers of differentiation, add new growth drivers, and leverage its power in the industry,” Sigman said. “That said, it's difficult to see the stock working until, first, it clears the difficult 2H comparison hurdle, and second, like many other retailers, it provides better visibility on the investment outlook (which should be forthcoming) and EPS growth trajectory past 2017.”

Management Appears Optimistic About Margins

While Sigman is watching Dick’s margins closely, Sigman highlighted “Management appeared optimistic about the benefits from vendor restructuring, improving online economics by transitioning the platform in house, and recent cost reductions. But it has also suggested that investments will continue, to grow online, private brands, and new channels such as Team Sports HQ.”

Thus, based off of management comments, this should lead to stronger sales growth, and keep Dick’s very competitive in the sporting goods retail industry.