2. DICK’S Sporting Goods Inc. (NYSE:DKS)
Average Upside Potential: 22.33%
Number of Hedge Fund Holders: 34
DICK’S Sporting Goods Inc. (NYSE:DKS) is the largest sporting goods retailer in the US and offers a range of athletic footwear, apparel, and equipment for various sports, including golf. Its golf offerings include clubs, balls, bags, and accessories from popular brands such as Callaway, TaylorMade, and Titleist. It operates dedicated golf sections within its stores and has expanded its Golf Galaxy brand to include performance centers that feature advanced technologies like TrackMan for custom fittings and lessons.
In the second quarter of fiscal year 2025, the company generated $3.47 billion in sales, a 7.75% increase year-over-year. Same-store sales rose by 4.5%, driven by growth in both average ticket size and transaction volume (7% boost), as well as strong performance in footwear and athletic apparel. There was a 15% increase in e-commerce sales and a focus on profitable private-label products. The company’s strategic partnerships, such as the recent deal with a top athletic brand, and plans for new store openings demonstrate its commitment to future growth.
DICK’S Sporting Goods Inc. (NYSE:DKS) continued to attract and retain athletes, who increasingly chose to shop both in-store and online. The focus on enhancing the omnichannel athlete experience, including innovative store concepts like House of Sport and Field House, contributed significantly to this growth. These stores offer interactive features and strong brand partnerships, creating a unique and engaging shopping experience.
It’s committed to maintaining its market leadership by offering trendy and unique products. The company is also prioritizing employee satisfaction and brand building. These strategies are expected to drive continued growth and long-term success.
Emeth Value Capital made the following comment about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q2 2023 investor letter:
“For as often as the phrase “a private equity approach to public markets” is repeated, it is surprising to observe the great divide that exists between even very sophisticated long-term investors in public and private markets. There is perhaps no more well-trodden battleground than that of valuation marks. Public investors, particularly in times of market stress, are quick to express frustration that private equity portfolios are not marked to market. The title of Cliff Asness’ recent opinion piece in Institutional Investor captures the sentiment well, “Why Does Private Equity Get to Play Make-Believe With Prices?”. The level of discontent is surprising for two reasons: first, the difference in methodology is quite easily understood, and second, contrary to public markets gospel, it is evident that liquidity and the discovery of value are in no way synonymous. Indeed, they may be opposing forces more often than not. At the risk of oversimplifying, one can think of private equity marks as single-variable valuations, while public equity marks are dual-variable valuations. Both incorporate the level of earnings in a business, but while multiples are held relatively constant in private equity marks, public market marks also incorporate sentiment in the form of a changing multiple. The problem is that Mr. Market tends to change his opinion quite often. Consider the case of one of our former portfolio companies, DICK’S Sporting Goods, Inc. (NYSE:DKS)…” (Click here to read the full text)
