Why Dick's (DKS) Stock Is Up Today

Radek Strnad /
2024/03/14 12:20 pm EDT

What Happened:

Shares of sporting goods retailer Dick’s Sporting Goods (NYSE:DKS) jumped 14.3% in the morning session after the company reported fourth-quarter results that exceeded analysts' revenue expectations. Same store sales also came in ahead of consensus estimates, due to a 1.6% increase in transactions as the business continued to gain market share following a strong holiday season. Looking ahead, full-year earnings guidance exceeded Wall Street's estimates, while full year same store sales guidance was roughly in line with expectations. Lastly, the company bumped its quarter dividend by 10% to $1.10 per share. Overall, this quarter's results seemed fairly positive, and shareholders should feel optimistic.

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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 4 moves greater than 5%. 

The biggest move we wrote about over the last year was 7 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, with the markets likely reacting to the weak earnings and lowered guidance.

Dick's is up 46.3% since the beginning of the year. Investors who bought $1,000 worth of Dick's's shares 5 years ago would now be looking at an investment worth $6,108.

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