Analyst Note| David Swartz |
No-moat Dick’s Sporting Goods opened 2021 with its most profitable quarter ever, as sales and margins crushed all expectations. Consequently, it lifted its 2021 adjusted EPS guidance to a range of $8.00-$8.70, far above that of any prior year and our previous $4.90 estimate. For some context, Dick’s had never achieved annual EPS of as much as $4.00 before last year. Given its momentum, we expect to raise our $53 fair value estimate by a high-single-digit percentage. However, as Dick’s share price is now trading at more than double its prepandemic (early 2020) levels after a 17% jump on the news, we view it as overvalued. While the short-term outlook is favorable, the comparisons over the next four quarters will be extremely tough.