Dick's Sporting Goods (DKS): A Beneficiary Of The Cabela's/Bass Merger - UBS

October 4, 2016 8:38 AM EDT
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Price: $56.71 --0%

Rating Summary:
    22 Buy, 17 Hold, 0 Sell

Rating Trend: = Flat

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UBS analyst, Michael Lasser, reiterated his Buy on Dick's Sporting Goods (NYSE: DKS) noting that the Cabela’s (NYSE: CAB) & Bass Pro merger is another sign of consolidation which puts the stronger players in the category in an even better position.

Dicks Sporting Goods has 1% of its stores in a 15 min trade area (5% in a 20 min trade area) that also contains both a Bass & a Cabelas. It's possible that none of these overlapping stores are closed as a result of the merger. Though, we calc. DKS could pick up 15 bps of comp & $2.5 mm of EBIT for every store that is consolidated between the merging parties (assuming DKS captures 25% share & achieves a 20% contribution margin). This should keep DKS' share gains going well past the next few Qs.

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