Dick's Sporting Goods To Gain From Diverse Assortment Of National Brands, Rollout Of New Store Concepts: Analyst

Telsey Advisory Group analyst Joseph Feldman reiterated Outperform rating on Dick’s Sporting Goods Inc DKS, raising the forecast to $245 from $195. 

The company reported fourth-quarter FY23 sales growth of 7.8% year-on-year to $3.876 billion, beating the analyst consensus estimate of $3.796 billion.

The fourth quarter comp was 2.8% and exceeded estimates—despite facing difficult comparisons of 5%, 6%, and 19% in the fourth quarter of 2022, the fourth quarter of 2021, and the fourth quarter of 2020, respectively.

A solid demand for sporting goods and benefits from the company’s improved product assortment, store experience, omnichannel capabilities, and pricing strategies also aided results.

According to the analyst, the company should remain a leader in the $140 billion sporting goods industry, supported by its improved positioning in the marketplace, including a diverse assortment of national brands, high-performing private brands, the rollout of attractive new store concepts, and a larger and more profitable e-commerce channel.

In addition, the company’s operations continue to be enhanced by the implementation and adoption of new technologies and systems, the analyst adds.

Feldman raised the 2024 EPS estimate to $13.25 from $13.09, with a lower comp of 1.8% vs. 2.1% previously and an unchanged operating margin expansion of ~20 bps to 10.9%.

For 2025, the analyst models EPS of $14.31, on a comp of 2.1%, and an operating margin expansion of ~30 bps to 11.2%. 

Price Action: DKS shares are trading lower by 3.01% to $210.29 on the last check Friday.

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