No-Moat Dick’s Sporting Goods Continues Its Winning Ways in Q2; Shares Expensive

Dick’s Sporting Goods shook off concerns over inflation and changing consumer habits to post 2022 second-quarter results above our expectations. Moreover, after offering a mixed outlook three months ago, it slightly lifted its guidance for the year. We expect to raise our $76 fair value estimate by a low-single-digit percentage but view Dick’s shares, up more than 40% over the past three months, as overvalued. Although we believe the firm has made progress in merchandising and e-commerce, we rate it as a no-moat company in the competitive sporting goods space with comparable sales growth of 2% and minimal earnings growth in the long run.