DICK'S Sporting Goods Gains From Return Of Team Sport & Outdoor Activities, Says Analyst

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of DICK'S Sporting Goods Inc DKS with a price target of $135.00.
The company had a strong 4Q22, as consumers continued to spend on sporting goods, resulting in a wide beat in sales with a comparable sale of 5.3% versus the analyst's expectation of 3.0%.
The higher sales led to a lower selling, general and administrative ratio. The gross margin, however, compressed about 600 basis points YoY to 32.4% and was lower than expected despite the higher sales, likely reflecting higher supply chain costs and promotional activity.
DKS also announced a 105% increase in its quarterly dividend to $1.00 per share, a sign of confidence in the structural changes in the business.
The 4Q22 beat and better-than-expected 2023 guidance is encouraging and supports the view that the company is gaining share in sports and outdoor equipment and athletic apparel & footwear, as team sports returned and consumers prioritize healthy lifestyles, outdoor activities, and comfortable attire, said the analyst.
Deteriorated macroeconomic environment, as well as higher costs and promotions, remain potential headwinds going forward, added the analyst.
The analyst continues to view DKS as a long-term share gainer through its unique assortment of national brands, differentiated private brands, and e-commerce, which is helped by its off-mall locations that provide convenient BOPIS and curbside pickup experiences.
Price Action: DKS shares are trading higher by 10.75% at $146.35 on the last check Tuesday.
Photo Via Wikimedia Commons

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