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DICK'S Sporting's (DKS) Q1 Earnings & Sales Beat, Stock Up

Shares of DICK'S Sporting Goods, Inc. DKS jumped more than 2% following better-than-expected top and bottom lines for first-quarter fiscal 2023. The company has been benefiting from the compelling assortment and structural transformation in recent years.

Adjusted earnings were $3.40 per share in the fiscal first quarter, up 19% from the prior-year figure of $2.85. Also, adjusted earnings beat the Zacks Consensus Estimate of $3.22 per share.

Net sales of $2,842 million improved 5.3% year over year and surpassed the Zacks Consensus Estimate of $2,817 million. The upside can be attributable to strong comps and healthy transaction growth.

Consolidated comparable store sales (comps) grew 3.4%, up from comps decline of 8.4% in the year-ago quarter. The figure also came ahead of our estimate of 3.1% growth. This was driven by a 2.7% increase in transactions and higher average tickets.

Gross profit grew 4.5% year over year to $1,028.6 million and came ahead of our estimate of $982.4 million. Meanwhile, the margin contracted 28 basis points (bps) year over year to 36.2% in the fiscal first quarter.

In the fiscal first quarter, the SG&A expense rate of 24.4% expanded 162 bps year over year. SG&A expenses, in dollar terms, increased 12.8% to $693.9 million and came ahead of our estimate of $631.1 million.

DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise

DICK'S Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICK'S Sporting Goods, Inc. Quote

Financial Aspects

DICK’S Sporting ended the fiscal first quarter with cash and cash equivalents of $1,642.7 million and no borrowings under the $1.6-billion revolving credit. Total inventory improved 7.4% year over year to $3,034.2 million as of Apr 29, 2023.

The company paid out dividends worth $105 million and repurchased 0.4 million shares for $57.7 million. It has $1.4 billion remaining under its existing share repurchase authorization. On May 22, DICK’s Sporting declared a quarterly dividend of $1 per share on common stock and class B common stock, to be payable on Jun 30 to shareholders of record at the close of business on Jun 16.

As of Apr 29, 2023, net capital expenditure amounted to a loss of $84.5 million. DICK’S Sporting projects capital expenditure of $670-$720 million on a gross basis and $550-$600 million on a net basis for fiscal 2023.

Guidance

Driven by the impressive quarterly results, management issued its fiscal 2023 view. For fiscal 2023, the company expects comps to be flat to up 2% in sync with our estimate of 1.1% growth. It envisions adjusted earnings of $12.9-$13.8 per share, including 20 cents for the 53rd week. The adjusted earnings view assumes 88 million shares outstanding as of fiscal 2023. Also, the effective tax rate is expected to be 21%.

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Shares of this Zacks Rank #3 (Hold) company have gained 5.1% year to date compared with the industry’s 2.6% growth.

Store Update

In the reported quarter, the company closed two stores, acquired 12 stores and relocated one. The total store count came in at 863, including three DICK'S House of Sport stores, 97 Golf Galaxy stores, seven Public Lands stores and 15 Going Going Gone! Stores, as of Apr 29, 2023.

Stocks to Consider

Here are some better-ranked stocks, namely Tecnoglass TGLS, Kroger KR and Hibbett HIBB.

Tecnoglass manufactures and sells architectural glass and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 18.1% and 23.8%, respectively, from the corresponding year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 22.7%, on average.

Hibbett is an athletic-inspired fashion product company, which currently carries a Zacks Rank #2 (Buy). HIBB has an expected earnings per share growth rate of 12.4% for three to five years.

The Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 5.7%, while earnings per share are expected to fall 0.1% from the corresponding year-ago reported figures. HIBB has a trailing four-quarter negative earnings surprise of 13.9%, on average.

Kroger, a renowned grocery retailer, currently sports a Zacks Rank of 1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.

The Zacks Consensus Estimate for Kroger’s current financial year’s earnings per share suggests growth of 6.6% from the year-ago reported figure. KR has an expected earnings per share growth rate of 6% for three to five years.

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Hibbett, Inc. (HIBB) : Free Stock Analysis Report

Tecnoglass Inc. (TGLS) : Free Stock Analysis Report

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