Dick’s Sporting Goods stock surges on raised outlook, Bank of America upgrades to Buy By Investing.com
Dick's Sporting Goods (NYSE:) stock jumped more than 15% on Wednesday after the company reported a strong first quarter with earnings and revenue topping analysts' expectations, prompting the company to raise its full-year guidance.
The sporting goods retailer reported adjusted EPS of $3.30, beating the consensus estimate of $2.98. Revenue for the quarter came in at $3.02 billion, also beating expectations of $2.94 billion. This performance represents a 6.2% increase in net sales compared to the same period last year, which confirms the company’s strong position in the market.
The company's success in the first quarter was attributed to comparable sales growth of 5.3%, driven by increases in transactions and average ticket size. Management credited the company's position as a premier destination for sports and sports culture in the United States, as well as strong product offerings from key brand partners and its own portfolio of vertical brands.
Lauren Hobart, President and CEO, expressed pride in the company's performance, highlighting its double-digit earnings before interest and tax (EBT) margin of more than 11% and continued market share gains.
“Our core strategies and execution are delivering strong results, and we continue to gain market share as consumers prioritize Dick's Sporting Goods products to meet their needs,” Hobart said.
Looking ahead, Dick's Sporting Goods raised its full-year 2024 EPS guidance to a range of $13.35 to $13.75, up from the previous range of $12.85 to $13.25. This updated forecast is higher than the analyst consensus of $13.24. The company also expects full-year 2024 revenue to be between $13.1 billion and $13.2 billion, which is in line with the consensus estimate of $13.16 billion.
The company's optimistic outlook is further supported by the announcement of a quarterly dividend of $1.10 per share, payable on June 28, 2024, to shareholders of record as of June 14, 2024.
CEO Ed Stack commented on the quarter's results, emphasizing the company's momentum and anticipating new and innovative products from brands like Nike.
“We have great momentum and are excited about the outstanding product and compelling experience we offer,” Stack said.
In response to the report, Bank of America Securities upgraded DKS to Buy from Neutral, noting that the company's omnichannel execution is well ahead of peers and that key brand partnerships are at all-time highs.
Bank of America said: “DKS is repositioning its retail portfolio to include House of Sport stores (+75-100 by 2027) and Next Generation stores (+16 in 2024) that are operating at higher levels of sales and profitability versus legacy stores and DKS is seeing momentum In vertical apparel brands (CALIA, VRST, DSG) whose sourcing capabilities compete with leading global sports brands.”
Meanwhile, analysts, focusing on the results, commented that it was a solid win as “comps fell ahead of the specter (which we thought was +3-4%), and margins were better than expected given management had talked to them a bit, leading to Some are bracing for a potential EPS loss (despite the strong recent beat).”
Analysts said the first-quarter results represented a strong start to the retailer's FY24, noting that earnings and revenue were above their estimates.
Analysts highlighted that the company's gross margin rose +10 basis points year over year to 36.3% in Q1, while inventory level increased +5.5%, compared to +0.6% in 4Q23.
“Dick's Sporting Goods performed much better than expected in the first quarter of 2024, with the company performing very well despite the challenging consumer environment,” the analysts said.
“Overall, we believe Dick's continues to gain share in this category, given its unique portfolio of national brands, premium private labels, new concepts, such as House of Sports, and e-commerce, helped by its off-mall locations offering BOPIS and curbside pickup experiences.” On the comfortable sidewalk.”
