Yahoo Finance Dick's (DKS) Down 1.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Dick's Sporting Goods (DKS). Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dick's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
DICK'S Sporting’s Q1 Earnings & Sales Beat Estimates
DICK'S Sporting posted impressive first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Sales also improved year over year. Despite the challenging macroeconomic environment, the company has been benefiting from its strategic efforts and continued market share gains. It is on track with business optimization to streamline the overall cost structure.
Q1 in Detail
Adjusted earnings were $3.30 per share, down 3% from the year-ago figure of $3.40. However, the bottom line beat the Zacks Consensus Estimate of $2.94.
Net sales of $3,018 million improved 6.2% year over year and surpassed the consensus estimate of $2,943 million. The upside can be attributed to comparable store sales (comps) and healthy transaction growth.
Consolidated comps grew 5.3% year over year. Also, the figure surpassed our estimate of 2.8% growth. This was driven by higher transactions and average tickets.
Gross profit rose 6.5% year over year to $1,095.3 million and came ahead of our estimate of $1,056.1 million. Meanwhile, the margin expanded 10 basis points (bps) year over year to 36.3%.
In the fiscal first quarter, the SG&A expense rate of 24.6% expanded 20 bps year over year. SG&A expenses, in dollar terms, increased 7.1% to $743.4 million and beat our estimate of $719.2 million.
Financial Aspects
DICK’S Sporting ended the fiscal first quarter with cash and cash equivalents of $1.6 billion and no outstanding borrowings under the revolving credit facility. Total inventory rose 6.7% year over year to $3.2 billion as of May 4, 2024.
The company repurchased 0.5 million shares under its share repurchase program for $113.6 million, of which $5.0 million was paid after the quarter. It had $665.9 million remaining under its authorization as of May 4.
On May 28, the company's board authorized and declared a quarterly cash dividend of $1.10 per share on its common stock and Class B common stock. The dividend is payable on Jun 28, to stockholders of record as of Jun 14, 2024.
As of May 4, net capital expenditure amounted to $126.2 million. DICK’S Sporting projects capital expenditure of $900 million on a gross basis and $800 million on a net basis for fiscal 2024.
Guidance
Management raised its fiscal 2024 guidance. It expects net sales to be in the range of $13.1-$13.2 billion.
DKS envisions adjusted earnings in the band of $13.35-$13.75 per share compared with our estimate of $13.14 and the earlier guided range of $12.85-$13.25. The adjusted earnings view assumes 83 million shares outstanding as of fiscal 2024. The effective tax rate is expected to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 6.87% due to these changes.
VGM Scores
At this time, Dick's has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Dick's has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report
