Dick's Sporting Goods Earnings: Solid Start to 2023, but Consumer Spending and Costs Are Concerns

Matching our estimate for 5% sales growth, Dick's Sporting Goods' first-quarter results generally aligned with our expectations. As the firm reiterated its full-year guidance for EPS of $12.90-$13.80 on flat to 2% comparable sales growth, we expect to make minimal revisions to our respective estimates of $13.54 and 1%. Overall, we believe Dick’s is executing well in an industry that has been struggling with elevated inventories and slowing consumer spending on athletic apparel and footwear. Thus, we expect to lift our $89 fair value estimate by a low-single-digit percentage. Although we believe its valuation is stretched and view it as a no-moat retailer due to the competitiveness of its space, we also think Dick’s has strengths, including its relationship with key vendors like wide-moat Nike, its loyalty program, and its prominence in youth sports.