Why Dick's Outperformance In The Sporting Goods Sector Is Here To Stay: A Deep Dive Into The Brand's Unique Strengths

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Dick's Sporting Goods Inc DKS with a price target of $160.

Dick's Sporting Goods will report 2Q23 earnings on Tuesday, Aug 22, 2023.

The analyst maintains a 2Q23 EPS estimate of $3.69, reflecting a comp of 3.0%.

While challenges exist from a worsened macroeconomic environment and lapping difficult comparisons from the last few years, the industry has remained stable, the analyst noted.

The U.S. Census Bureau data for the sporting goods, hobby, and book category showed sales up about 2% YoY in May and down about 1% YoY in June. The analyst expects Dick's to outperform the industry, as it has historically.

From a profit perspective, the analyst maintains an operating margin contraction of 95 basis points to 13.8% (Fact Set 14.1%), given higher promotions compared to last year and elevated operating costs.

The analyst believes the company should generate solid sales growth, given continued demand for fitness and outdoor equipment and athletic apparel & footwear.

Dick's is gaining share and should continue to do so over the long term, thanks to its unique assortment of national brands, improved product allocation, differentiated private brands, and e-commerce, added the analyst.

Price Action: DKS shares are trading higher by 2.31% at $148.32 on the last check Tuesday.