MKM Partners Reiterates Buy on Dick's Sporting Goods (DKS) Following 3Q Report and Guide
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MKM Partners reiterated a Buy rating and $67.00 price target on Dick's Sporting Goods (NYSE: DKS) following the company's 3Q earnings report. Excluding costs related to the conversion of 22 former Sports Authority stores, EPS increased 7% to $0.48 vs. $0.41 estimates. Consolidated comps increased 5.2% vs. 2.5% estimates and included a 5.5% gain at Dick's and a 3.3% decrease at Golf Galaxy. For 4Q16, MKM continues to expect 5.0% comps vs. guidance of 3%-6% but are trimming ex-items EPS estimates from $1.33 to $1.29 to better reflect guidance of $1.19-$1.31.
Analyst Patrick McKeever commented, "Same-store sales accelerated from 2Q and were the strongest since 4Q13, while EPS were well ahead of our forecast, driven in part by a significant improvement in merchandise margins. Management also raised FY16 guidance while taking what we think is a conservative approach to 4Q, given the warm weather. The stock was up more than 70% YTD going into the print (SPX up 6%) and sold off 7% yesterday (SPX up 1%), which put the forward P/E at only 14.7x. We remain bullish and would use the pullback as a buying opportunity."
Shares of Dick's Sporting Goods closed at $56.71 yesterday.
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