7. Dicks Sporting Goods Inc. (NYSE:DKS)
Number of Hedge Fund Investors: 34
Jim Cramer was surprised by the reaction to Dicks Sporting Goods Inc. (NYSE:DKS)’s latest earnings report. He initially thought Dicks Sporting Goods Inc. (NYSE:DKS) had a strong quarter, but the stock dropped more than 10% in response. The quarter was indeed impressive as Dicks Sporting Goods Inc. (NYSE:DKS) achieved 4.5% same-store sales growth, surpassing the expected 3.4%, and reported net sales and earnings per share well above forecasts. EPS hit $4.37, exceeding expectations by 51% and showing a 55% increase year-over-year. Despite Dicks Sporting Goods Inc. (NYSE:DKS)’s decline, Cramer remains optimistic. He believes the drop might be due to profit-taking, as the stock had risen substantially before the earnings report.
“What just happened with Dick’s Sporting Goods? This morning, I thought they reported a great quarter, but the market sent the stock down more than 10%. That’s insane! The quarter was strong—Dick’s delivered 4.5% same-store sales growth when the Street was only expecting 3.4%. Net sales were higher than anticipated, and earnings per share came in at $4.37, 51% higher than expected, and up 55% year-over-year. Pretax margins jumped from 10.1% last year to 13.9% this year—that’s very hard to do. In short, the company is firing on all cylinders. Plus, they raised part of their full-year forecast for the second quarter in a row, boosting their same-store sales outlook and earnings guidance.
I’m feeling pretty sanguine about Dick’s after the quarter—certainly more than the market seems to be. Although the stock has already recovered more than half of its losses from this morning’s 10.6% beatdown, at these levels, Dick’s is trading for less than 16 times this year’s earnings estimates. It’s a cream-of-the-crop retailer, and I think it has a lot more room to run.
I think Dick’s sold off today because it was up huge going into the quarter, and profit-takers were simply looking for an excuse to sell. After the selloff, though, I say you’re getting a fabulous buying opportunity in a stock that deserves to be substantially higher. Amid the gloom caused by conservative guidance—which is what we got here—you see what people think is hard gospel when it might just be a need to play it close to the vest in an obviously uncertain time.”
Dicks Sporting Goods Inc. (NYSE:DKS) is set for continued growth, demonstrated by its solid Q2 2024 financial performance and strategic moves. Dicks Sporting Goods Inc. (NYSE:DKS) reported a 5% increase in revenue, reaching $3.35 billion, driven by a 4.5% rise in same-store sales and a 7% boost in average transaction value. Its net income grew to $232 million, or $2.28 per share, exceeding analysts’ expectations.
A major factor in this success is Dicks Sporting Goods Inc. (NYSE:DKS) investment in its online platform, which led to a 15% increase in e-commerce sales. Additionally, Dicks Sporting Goods Inc. (NYSE:DKS)’s focus on private label products has improved profit margins. Recent news highlights a new partnership with a top athletic brand and plans for new store openings, showing confidence in further growth.
Dicks Sporting Goods Inc. (NYSE:DKS)’s commitment to sustainability, including efforts to reduce its carbon footprint and use more recycled materials, aligns with current consumer preferences for eco-friendly practices. These factors make Dicks Sporting Goods Inc. (NYSE:DKS) a strong investment choice with promising growth prospects.
