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Goldman Sachs Reiterates Buy Rating On Dick's Sporting Goods

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According to Goldman Sachs, Dick's Sporting Goods (NYSE: DKS) 1Q results put a dent in the Buy thesis, but did not break it.

Goldman Sachs said that inclement weather in April undermined what was shaping up to be a stellar quarter, and what it thought would be a good quarter, on both the top- and bottom-lines, despite April's storms. “The challenge that emerged from the quarter was the relative sensitivity of the weather, at least in transitional seasons, and that one bad month can throw the firm sharply off its sales plan. We have reflected a discount for this volatility in our new valuation assumptions and in adjustments to our forecasts. Several positives emerged however including that inventories were well-controlled, despite the sales miss; and as a result, merchandise margin increases exceeded our estimates and appear to have legs; and, new space productivity remains robust. Also, the firm adjusted to poor sales “on the fly” by cutting SG&A further, though we do not expect the company to get paid for this cost discipline.”

Dick's Sporting Goods closed yesterday at $39.42.

 

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