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Dick's Sporting Goods Inc DKS

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Morningstar’s Analysis

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No-Moat Dick’s Incredible Winning Streak Continues in Q1; Shares Overvalued After Huge Move

David Swartz Equity Analyst

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.

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Company Profile

Business Description

Dick’s Sporting Goods retails athletic apparel, footwear, and equipment for sports. Dick’s operates about 730 stores and another 125 specialty stores under the Golf Galaxy and Field & Stream names. Dick’s also operates e-commerce sites including youth sports site Team Sports HQ. Dick’s carries private-label merchandise and national brands such as Nike, The North Face, Under Armour, Callaway Golf, and TaylorMade. Based in the Pittsburgh area, Dick’s was founded in 1948 by the father of current executive chairman and controlling shareholder Edward Stack.

Contact
345 Court Street
Coraopolis, PA, 15108
T +1 724 273-3400
Sector Consumer Cyclical
Industry Specialty Retail
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 50,100

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