DICK'S Sporting (DKS) Holds Promise: Time To Stock Up?

DICK’S Sporting Goods Inc. (NYSE:DKS) seems like a promising stock at the moment. Recording a jump of over 60% year-to-date, this Zacks Rank #1 (Strong Buy) stock has been gaining from the expansion of its omnichannel network, powerful marketing and merchandising strategies. Further, the company’s solid financials, a long-term earnings growth rate of 12.3% and a VGM Score of “A”, emphasize its future prospects.

What’s Behind the Growth?

PA-based DICK’S Sporting is well poised to compete with other players in the industry due to its customer-oriented strategies, store growth plan and healthy financial status. Additionally, the company’s unique strategy of offering exclusive branded merchandise, sourced from leading manufacturers, provides it an edge over its peers.

Further, the company stands out with its strategy to remain focused on aggressively expanding its retail store base, alongside developing its eCommerce capabilities. This sporting goods retailer expects its store expansion and eCommerce endeavors to help achieve its long-term revenue target of $8.7–$9.0 billion by the end of fiscal 2017. On its path to reaching the aforementioned revenue goal, DICK’S Sporting targets expanding its retail store count to 735–750 by the end of fiscal 2017 from 644 stores at the end of fiscal 2015.

Additionally, the company remains committed toward undertaking investments in omnichannel business, as is obvious from its increased eCommerce penetration. The company launched its first Field & Stream eCommerce website in Oct 2016, thereby ending the second phase of its eCommerce development plan. Previously, the company had launched its Golf Galaxy website in Mar 2016. Further, the company remains on track to relaunch dicks.com on its own web platform in Jan 2017.

It also boasts a strong balance sheet, which offers it the financial flexibility to drive future growth. This is chiefly exhibited by its regular dividend payouts and constant share buybacks.

However, the company anticipates witnessing some near-term pressure, owing to the major liquidation going on in the sporting goods space. Stiff competition also remains a threat.

Nonetheless, the company's raised fiscal 2016 earnings and comps outlook instills confidence about its future prospects. Over the past 30 days, the Zacks Consensus Estimate of $3.04 and $3.65 for the fiscal 2016 and 2017 has increased 1 cent and 5 cents, respectively.

Other Stocks to Consider

Some favorably ranked stocks in the same industry include Big 5 Sporting Goods Inc. (NASDAQ:BGFV) , Marinemax Inc. (NYSE:HZO) and ULTA Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) .

Big 5 Sporting Goods, with a long-term earnings growth rate of 12%, has surged nearly 67.5% year to date. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marinemax, a Zacks Rank #2 stock, has jumped 13.8% year to date. The stock has a long-term earnings growth rate of 30%.

ULTA, also carrying a Zacks Rank #2, has gained nearly 29.2% year to date. Moreover, it has a long-term earnings growth rate of 19.5%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>