Dick's Sporting Goods (DKS, Financial) is a full-line sports and fitness retailer offering a broad assortment of high quality, competitively-priced brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer. The company has seen quite a bit of volatility in its stock price since the begining of 2014.
Dick's stock price corrected meaningfully in the first half of 2014. The main culprit was continued pressure in its golf and hunting business which affected its comparable store sales. The company's hunting business comped down mid-single digits while the company's golf business comped down in high single digits during the first three quarters of last year.
However, the good news is that the company's hunting business is expected to improve going forward as year-over-year comparisons begin to ease. Also, in the second half of 2014, the company has reallocated 1000 square feet of its golf equipment area to women's and youth athletic apparel. Customer response to the new product selection and merchandising presentation has been positive. So, going forward, we can expect headwind from the company's golfing and hunting business to dissipiate. San's golfing and hunting, the rest of Dick's business delivered a 6% comp increase last quarter. Going forward, the company has guided for 2015 full year consolidated comp growth of 1% to 3% with earnings increasing to $3.10 to $3.20 per diluted share. I believe the company can do better than it has guided for given its stablizing hunting and golf business and the strong trend in rest of the business.
The company is undergoing fast expansion and its store count has increased from 561 in the begining of Fiscal 2012 to 694 at the end of fiscal 2014. In the last quarter, the company opened six new stores.
In addition to high growth prospect, management is also showing strong commitment to returning capital to shareholders. The company has repurchased over $455 million of stock since the beginning of 2013. The company has a dividend yield of 1%.
The company's EPS forecast for the current fiscal year is $3.20 and next year is $3.59. According to the consensus estimates, its top line is expected to grow 8.90% current year and 8.70% next year. Out of 31 analysts covering the company, 11 are positive and have buy recommendations, and 20 have hold ratings. The have also been rumours of the company going private and given the attractive valuation of just 15.99x forward PE, we can clearly see why it makes sense. I believe Dick's Sporting Goods is a good GARP (growth at a resonable price) stock to have in your portfolio.
