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Dick’s Sporting Goods’ Quarterly Profit Pops 84% As Online Buying Booms; Shares Sink

Dick’s Sporting Goods posted strong 4Q results driven by booming eCommerce sales growth as consumers shopped from home due to pandemic-led restrictions. However, shares plunged 6.3% to close at $71.82 on March 9, as the sporting goods retailer expects consolidated same-store sales growth to decline or increase by up to 2% in full year 2021.

Dick’s (DKS) 4Q adjusted earnings of $2.43 per share surged 84% on a year-over-year basis and outpaced the Street estimates of $2.26 per share. Net sales jumped 19.8% to $3.13 billion, topping analysts’ expectations of $3.07 billion.

The company’s same-store sales increased 19.3% year-over-year, driven mainly by eCommerce sales growth of 57%. (See Dick’s Sporting Goods stock analysis on TipRanks)

Dick’s CEO Lauren Hobart said, “Our focus in 2021 will center around enhancing our existing strategies to accelerate our core and enable long-term growth.”

For the full year 2021, the company projects net sales to land between $9.544 billion to $9.935 billion, versus the consensus estimate of $9.59 billion. Adjusted EPS is anticipated to range from $4.40 to $5.20, versus analysts’ expectations of $5.15 per share.

Last week, DKS raised its quarterly cash dividend by 16% to $0.3625 per share on the company’s common stock and Class B common stock. The new dividend will be paid on March 26 to shareholders of record as of March 19. The company’s annual dividend of $1.45 per share now reflects a dividend yield of 2.02%.

Following the 4Q results, Robert W. Baird analyst Peter Benedict increased the stock’s price target to $75 (4.4% upside potential) from $64 and reiterated a Hold rating.

The analyst said, “Robust fourth quarter results capped off an unprecedented year for the company, and plans to accelerate capital expenditures should help drive continued market share gains.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 analysts suggesting a Buy, 5 analysts recommending a Hold and 1 analyst suggesting a Sell. The average analyst price target of $75.20 implies 4.7% upside potential to current levels. Shares have jumped 28.5% over the past six months.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Dick’s is currently Positive as 7 hedge funds increased their cumulative holdings of the stock by 168,000 shares in the last quarter.

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