Dicks Sporting Goods, Inc. - Aggressive Growth

Dick's Sporting Goods, Inc. (DKS) is riding high even as many other retailers are slowing down and the most recent quarter gave investors plenty to be excited about.

Given the company's optimism it is no surprise that upward estimate revisions have pushed shares to a Zacks #1 Rank (Strong Buy).

Company Description

Dick's Sporting Goods is a sporting goods retailer (bet you didn't guess that) offering brand name equipment, apparel and footwear. In addition tot he 437 stores the company also owns Golf Galaxy, which has 91 stores. Locations are spread across 31 states and of course you can order through the company's website as well.

Yet Another Earnings Surprise

While a lot of retailers have fizzled lately, shares of DKS are still climbing thanks to the earnings release on Nov 16. Dick's Sporting Goods' third-quarter results showed a 9% increase in sales, due to $1.1 billion. E-commerce was up 82% and same-store sales were up 5.1% overall.

Net income came in at $26.7 million for an EPS of 22 cents, beating the Zacks Consensus Estimates by a nickel. Dick's Sporting Goods is no stranger to earnings surprises as they have beat in all but 1 quarter in the past 5 years.

Bullish Outlook

If the actual results weren't good enough, analysts definitely liked when the CEO said "We are also increasingly optimistic about our future growth opportunities..." and mention doubling the number of locations.

Estimates jumped a dime for this fiscal year, to $1.58. Next year's projections are averaging $1.84, up 13 cents on the news. Given the $1.20 earned in fiscal 2010, annual growth rates are expected to be 32% this year and another 16% next year.

Valuations

At first glance the forward P/E nearing 21 times and the PEG of 1.4 is not exactly enticing. But those figures are inline with the peer group and the price to sales near 0.9 is not too bad.

The Chart

Shares of DKS have been on fire recently, but you can see that they are not even able to keep up with those estimate revisions. The earnings trend is exactly what you want to see, year-over-year growth and sizable upward moves throughout the year.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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