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Dick's Sporting Goods Inc DKS

Morningstar Rating
$181.24 +3.35 (1.88%)
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Company Report

Dick’s Sporting Goods' Impressive Progress Is Threatened by Competition and Industry Conditions

We believe no-moat Dick’s Sporting Goods lacks an edge as sporting goods are sold through many channels. Although its sales and profitability growth over the past three years has been very impressive, we believe a slowdown is likely, as sporting goods retail is vulnerable to external competition. According to IBISWorld, sporting goods retail sales experienced average annual growth of just 1.3% in the five years before the pandemic. While Dick’s recent sales growth has generally outpaced this level, some of its rivals have posted strong results of their own. The firm’s competitors include e-commerce operators (such as wide-moat Amazon), mass retailers, specialty stores (narrow-moat Lululemon, Foot Locker, Bass Pro Shops/Cabela’s), and branded stores and owned e-commerce from major vendors. As an example of the latter, wide-moat Nike’s direct-to-consumer sales constituted about 44% of its fiscal 2023 Nike brand revenue sales, up from less than 20% before 2015. While Dick’s has strong relationships with Nike and other vendors, we do not believe its market position is strong enough to prevent it from offering exclusive merchandise in alternate channels. We forecast its compound average yearly sales growth of 3% over the next decade.

Price vs Fair Value

DKS is trading at a 85% premium.
Price
$181.24
Fair Value
$42.00
Uncertainty
High
1-Star Price
$659.10
5-Star Price
$75.20
Economic Moat
Gcq
Capital Allocation
Hhbzdhvc

Bulls Say, Bears Say

Bulls

Dick’s is the largest pure sporting goods chain in the U.S. Its has a large loyalty program that is integrated with that of Nike. Dick's has a strong business in high school and youth sports.

Bears

Key vendors of Dick’s, like Nike and Adidas, are reducing their dependence on wholesale sales by investing heavily in their own e-commerce and branded stores. A pullback from wholesale sales could have a negative impact.

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News

Trading Information

Previous Close Price
$177.89
Day Range
$178.24181.30
52-Week Range
$100.98181.30
Bid/Ask
$180.17 / $181.78
Market Cap
$14.82 Bil
Volume/Avg
793,083 / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
15.10
Price/Sales
1.26
Dividend Yield (Trailing)
2.21%
Dividend Yield (Forward)
2.21%
Total Yield
7.03%

Company Profile

Dick’s Sporting Goods retails athletic apparel, footwear, and equipment for sports. Dick’s operates digital platforms, about 725 stores under its namesake brand (including outlet stores), and about 135 specialty stores under the Golf Galaxy, Moosejaw, and Public Lands nameplates. 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.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Mid Core
Total Number of Employees
52,800

Competitors

Valuation

Metric
DKS
WMT
AMZN
Price/Earnings (Normalized)
15.1026.9462.74
Price/Book Value
6.115.669.17
Price/Sales
1.260.743.25
Price/Cash Flow
10.9014.1019.38
Price/Earnings
DKS
WMT
AMZN

Financial Strength

Metric
DKS
WMT
AMZN
Quick Ratio
0.520.200.70
Current Ratio
1.650.850.98
Interest Coverage
21.139.757.45
Quick Ratio
DKS
WMT
AMZN

Profitability

Metric
DKS
WMT
AMZN
Return on Assets (Normalized)
11.45%6.56%9.11%
Return on Equity (Normalized)
41.52%21.56%26.76%
Return on Invested Capital (Normalized)
16.28%12.12%14.52%
Return on Assets
DKS
WMT
AMZN
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