The Stars are Aligning for Dick's Sporting Goods (DKS)

July 24, 2012 11:56 AM EDT
Get Alerts DKS Hot Sheet
Price: $51.64 -1.47%

Rating Summary:
    24 Buy, 16 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 1 | Down: 2 | New: 3
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While the broader market sells-off, shares of Dick's Sporting Goods Inc. (NYSE: DKS) are up over 2 percent and analysts at Deutsche see three positive data points for the company ahead of the company's second quarter results in August

The three positive data points cited by the firm:

Under Armour (NYSE: UA) - UA's total sales, reported today, were +27% (25% in North America) up from 23% last quarter (22% in North America). Both apparel and footwear accelerated, although the acceleration in footwear was stronger and it sounds like this business was better than plan. We estimate the impact to DKS comps will be 1.4% this quarter, an acceleration from 0.8% last quarter. UA's inventory was well controlled at +22% versus +30% last quarter. We estimate that UA is a high-single-digits percentage of DKS business and that DKS is about 18% of UA's business.

The North Face - VF Corp reported on 7/19 that The North Face’s North American sales growth was 15%, consistent with the mid-single-digit growth the previous quarter, and that sell through in North America was solid and that the fall order book was up low double digits, consistent with the previous quarter.

Retail sales - Reported on July 16th, sales through "sporting goods, hobby, book and music stores" (NAICS 451) was up 7.8% in June compared to total retail sales excluding autos and gas up 2.7%. We estimate that sales through “sporting goods stores” (NAICS 45111) were up 7.9% in June. For May and June, the 1st two months of DKS 2Q, we estimate industry sales were up 8.2%, an acceleration from 7.3% last quarter.

The firm is maintaining its Buy rating and $56 target on DKS.

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