What Happened: Shares of sporting goods retailer Dick’s Sporting Goods (NYSE:DKS) jumped 9.5% in the morning session after the company reported an impressive "beat and raise" quarter. Third-quarter revenue exceeded Wall Street's projections, with management attributing the strong performance to increases in both transaction volume and average ticket size. Notably, the company highlighted a robust back-to-school season. We were also glad its full-year same-store sales and earnings guidance were both raised and ended up exceeding Wall Street's estimates. The only blemish was that its gross margin missed analysts' expectations. Overall, we think this was a very strong quarter that should satisfy most shareholders. After the initial pop the shares cooled down to $124.11, up 4.3% from previous close.
Is now the time to buy Dick's? Find out by reading the original article on StockStory.
What is the market telling us: Dick's's shares are not very volatile than the market average and over the last year have had only 7 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 21% on the news that the company reported disappointing second-quarter earnings, with revenue coming in below Wall Street's expectations. In addition, both earnings per share (EPS) and EBITDA missed analysts' estimates by a wide margin due to inventory shrinkage. This shrinkage (caused by clerical error, goods being damaged, lost, or stolen) led to a decline in profits.
Similarly, the company lowered full-year EPS guidance, which came in below consensus estimates. On a non-GAAP basis, the updated EPS guidance eliminates the impact of severance expected to be incurred as part of the company's new business optimization drive, which includes the elimination of some positions primarily at the customer support center on August 21, 2023. However, potential cost savings from the optimization efforts are expected to be mostly offset by "strategic talent investments over the next twelve months."
On the other hand, the company maintained the full year same store sales growth forecast at flat to positive 2.0%. Management also highlighted "robust transaction growth and continued market share gains" as the company continued to add new stores.
Overall, the results could have been better.
Dick's is up 2.9% since the beginning of the year, but at $124.11 per share it is still trading 17.1% below its 52-week high of $149.73 from March 2023. Investors who bought $1,000 worth of Dick's's shares 5 years ago would now be looking at an investment worth $3,534.