Big 5 Sporting Goods Corporation (BGFV), Hibbett Sports, Inc. (HIBB), Dicks Sporting Goods Inc (DKS): Three Takeaways From This Sports Retailer’s Earnings

In terms of assessing value, there are countless metrics we could look at; however, there are two metrics that really jump off the board to me.

The first is the forward P/E ratio, which is essentially a P/E ratio based on a stock’s current price and using the next 12 months’ earnings expectations. Hibbett and Dick’s trades at 17.32 and 15.57 times earnings, respectively. Big 5 is significantly cheaper at 13.4 times next year’s earnings, which is also below the S&P 500. This is especially impressive considering Big 5 has such lower operating margins compared to its peers.

Lastly, is its price/sales ratio. Hibbett Sports, Inc. (NASDAQ:HIBB) trades at 1.83 times sales and Dicks Sporting Goods Inc (NYSE:DKS) is at 1.09 times sales. Big 5 trades at just 0.54 times sales. This shows that minor operational changes can be made in order to produce high profits relative to the company’s market capitalization. In my opinion, this one metric alone shows the value present in shares of Big 5, despite its large one-year return.

Final thoughts

When you’re assessing a company, you need to do more than just look at the stock itself. You have to compare the stock to its competitors in order to realize true value.

In the case of Big 5 Sporting Goods Corporation (NASDAQ:BGFV), it was trading lower by 17% on Wednesday after a quarter that wasn’t too bad. However, after such a rapid run higher, there are many who associate stock gains with value, and that is simply not the case.

Big 5, compared to its peers, is presenting value: It is cheaper, has more room to improve, and is growing its same-store sales. Therefore, I’d take a long hard look at Big 5 after its post-earning loss.

Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article 3 Takeaways From This Sports Retailer’s Earnings originally appeared on Fool.com and is written by Brian Nichols.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.