Dicks Sporting Goods Inc (DKS), Foot Locker, Inc. (FL): Should You Follow Ron Baron’s Money?

These goals seem to be working considering revenue has improved over the past three years. According to Alexa.com, traffic for footlocker.com has steadily improved over the past two years. Time-on-site and bounce rate have also improved over the past three months, which indicates that people are staying on the site longer. This is a positive sign as it increases the odds of a sale.

Finish Line Inc (NASDAQ:FINL) has also increased revenue over the past three years, but earnings declined last year. Earnings also declined 17% last quarter. However, this was better than expected, and costs related to the company’s deal with Macy’s played a role.

Finish Line Inc (NASDAQ:FINL) aims to have 180 shops in Macy’s stores by the end of the year. This is something to build on for Finish Line, as revenue increased 10% year-over-year and same-store sales jumped 2.4%.

However, on a fundamental basis, Foot Locker, Inc. (NYSE:FL) looks to be the strongest option of the three companies mentioned. The difference in yield definitely plays a role. You’ll also notice a much lower short position for Foot Locker, Inc. (NYSE:FL) than its peers, which indicates more investor confidence in Foot Locker, Inc. (NYSE:FL).

Conclusion

Dick’s has been a success story for years, and the company still has a lot of room to grow. If it more than doubles its store count and the consumer is healthy, then it could lead to tremendous investor rewards. Unfortunately, that’s a big if considering the consumer is facing a myriad of headwinds. If Dicks Sporting Goods Inc (NYSE:DKS) expands to its desired number of stores and the consumer weakens, then the company may have too many unprofitable stores.

Foot Locker, Inc. (NYSE:FL) and Finish Line are also highly susceptible to a weakening consumer, which make them risky plays as well. If the consumer manages to hold on, then both companies are well-positioned for future growth. If not, then aggressive expansion plans could hurt profitability.

The article Should You Follow Ron Baron’s Money? originally appeared on Fool.com and is written by Dan Moskowitz.

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

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