Dick's (DKS)

Sporting goods retailer Dick’s Sporting Goods (NYSE:DKS) announced better-than-expected revenue in Q2 CY2025, with sales up 5% year on year to $3.65 billion. On the other hand, the company’s full-year revenue guidance of $13.85 billion at the midpoint came in 0.6% below analysts’ estimates. Its GAAP profit of $4.71 per share was 10.1% above analysts’ consensus estimates.

Company Overview

Started as a hunting supply store, Dick’s Sporting Goods (NYSE:DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.

Some of us spend our leisure time vegging out, but many others take to the courts, fields, beaches, and campsites; sports equipment retailers cater to the avid sportsman as well as the weekend warrior. Shoppers can find everything from tents to lawn games to baseball bats to satisfy their athletic and leisure needs along with competitive prices and helpful store associates that can talk through brands, sizing, and product quality. This is a category that has moved rapidly online over the last few decades, so these sports and outdoor equipment retailers have needed to be nimble and aggressive with their e-commerce and omnichannel presences.

Retailers offering sporting and outdoor goods include Academy Sports and Outdoor (NASDAQ:ASO), Sportsman’s Warehouse (NASDAQ:SPWH), and Hibbett (NASDAQ:HIBB).

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.

With $13.77 billion in revenue over the past 12 months, Dick's is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Dick's grew its sales at a mediocre 8.3% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts), but to its credit, it opened new stores and increased sales at existing, established locations.

This quarter, Dick's reported modest year-on-year revenue growth of 5% but beat Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months, a deceleration versus the last six years. We still think its growth trajectory is satisfactory given its scale and indicates the market sees success for its products.

Number of Stores

A retailer’s store count often determines how much revenue it can generate.

Dick's sported 889 locations in the latest quarter. Over the last two years, it has generally opened new stores, averaging 1.2% annual growth. This was faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.

Dick’s demand has been spectacular for a retailer over the last two years. On average, the company has increased its same-store sales by an impressive 4.3% per year. This performance suggests its measured rollout of new stores is beneficial for shareholders. We like this backdrop because it gives Dick's multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.

In the latest quarter, Dick’s same-store sales rose 5% year on year. This performance was more or less in line with its historical levels.

At StockStory, we prefer high gross margin businesses because they indicate pricing power or differentiated products, giving the company a chance to generate higher operating profits.

Dick’s unit economics are higher than the typical retailer, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 35.9% gross margin over the last two years. That means for every $100 in revenue, $64.13 went towards paying for inventory, transportation, and distribution.

Dick’s gross profit margin came in at 37.1% this quarter, in line with the same quarter last year and analysts’ estimates. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

Dick’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 11.1% over the last two years. This profitability was solid for a consumer retail business and shows it’s an efficient company that manages its expenses well.

Looking at the trend in its profitability, Dick’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, Dick's generated an operating margin profit margin of 12.4%, down 1.1 percentage points year on year. Since Dick’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Dick’s EPS grew at a remarkable 27.5% compounded annual growth rate over the last six years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q2, Dick's reported EPS of $4.71, up from $4.37 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Dick’s full-year EPS of $14.32 to grow 3.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Dick's has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 4.5% over the last two years, better than the broader consumer retail sector.

Taking a step back, we can see that Dick’s margin dropped by 2.2 percentage points over the last year. This decrease came from the higher costs associated with opening more stores.

Dick’s free cash flow clocked in at $296.2 million in Q2, equivalent to a 8.1% margin. This result was good as its margin was 2.9 percentage points higher than in the same quarter last year. Its cash profitability was also above its two-year level, and we hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Dick’s five-year average ROIC was 24.3%, beating other consumer retail companies by a wide margin. This illustrates its management team’s ability to invest in attractive growth opportunities and produce tangible results for shareholders.

Dick's reported $1.23 billion of cash and $4.61 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $39.84 billion of EBITDA over the last 12 months, we view Dick’s 0.1× net-debt-to-EBITDA ratio as safe. We also see its $9.15 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Dick's blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $227.11 immediately following the results.

Updated: November 15, 2025 at 9:34 PM EST

Before making an investment decision, investors should account for Dick’s business fundamentals and valuation in addition to what happened in the latest quarter.

There’s plenty to admire about Dick's. Although its revenue growth was mediocre over the last six years, its growth over the next 12 months is expected to be higher. And while Dick’s projected EPS for the next year is lacking, its marvelous same-store sales growth is on another level. On top of that, its market-beating ROIC suggests it has been a well-managed company historically.

Dick’s P/E ratio based on the next 12 months is 15x. Looking at the consumer retail landscape right now, Dick's trades at a pretty interesting price. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $242.13 on the company (compared to the current share price of $217.05), implying they see 11.6% upside in buying Dick's in the short term.