Dick's Sporting Goods (DKS) Opens 10% Lower After Slashing FY Profit Guidance, Results Seen as In-line With Recent Consumer Trends

May 25, 2022 9:43 AM EDT
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Price: $84.39 +8.40%

Rating Summary:
    24 Buy, 23 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 12 | New: 20
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Dick’s Sporting (NYSE: DKS) trimmed its adjusted EPS forecast for the full year, sending its shares tumbling.

DKS reported a Q1 adjusted EPS of $2.85, compared to $3.79 in the year-ago period, and above the consensus estimates of $2.47 per share. Net sales totaled $2.70 billion in the period, down 7.5% YoY and above the analyst consensus of $2.63 billion.

Similar to other retailers, DKS reported that inventory grew 40.4% in the quarter, while comparable sales were down 8.4%. Analysts were expecting a comparable sales decline of 10.8%.

Looking ahead, DKS expects FY adjusted EPS in the range of $9.15 to $11.70, down from the previous forecast of $11.70 to $13.10, while analysts were expecting $12.65 per share. The company expects EPS in the range of $7.95 to $10.15, down from $9.96 to $11.13.

Dick’s Sporting Goods forecasts FY comparable sales decline in the range of -2% to -8%, compared to the previous outlook of -4% to 0%, while analysts were projecting -2.27%.

Goldman analyst Kate McShane reiterated a Buy rating and a $130 price target on DKS.

“We anticipate the stock will trade down today given the weak/reduced full-year 2022 guidance. However, we note the stock has already pulled back meaningfully since 5/4 (down 31%) and as of last nights close, is currently trading at a 6.8x P/E based on the mid point of this new guidance,” the analyst told clients shortly after the earnings report was out.

Telsey Advisory Group analyst Joseph Feldman noted that the guidance cut was “disappointing” and in line with the firm’s outlook that consumers are spending less on sporting goods and promotions.

“The stock is likely to be under pressure today (down solidly in pre-market trading) and possibly in the near term. Longer term, we continue to view Dick's as a long-term share gainer through its unique assortment of national brands, differentiated private brands, and e-commerce, which is helped by its offmall locations that provide convenient BOPIS and curbside pickup experiences,” Feldman told clients in a note.

By Senad Karaahmetovic



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