PreMarket Prep Stock Of The Day: Dicks Sporting Goods

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

One noticeable trend this earnings season has been the reopening stocks posting monster beats on both the top and bottom line. That trend continues on Wednesday with Dicks Sporting Goods DKS.

Following The Game Plan: After ending 2019 at $49.49, the stock didn't follow the S&P 500 index higher to start the year and instead posted three straight losing months. In January, it declined from its year-end close to $44.23. It had almost an $8 decline in February, dropping to $36.41.

The bottom did fall out in March similar to the index and didn't find buyers until the bargain price of $13.46. It rebounded to end the month at $21.26. The March low coincided with its June 2009 low ($13.70).

Major Victory By August 2020: The pace of the rally accelerated in August with one of its best monthly gains ever, rallying from $45.62 to $54.12. By October it had surpassed its former all-time high from December 2016 ($62.80), reaching $63.29, but retreated to end the year at $56.21.

Not A Losing Month in 2021: The upward momentum kicked in at the start of the year, rallying from $56.21 to $67.01. It has solid gains in February ($67.01 to $71.37), March ($71.37 to $76.15) and April ($76.15 to $82.58).

This month, it bottomed just above April’s close on May 20 at $82.81 and was slightly higher than that ($84.17) before Wednesday’s report.

Hitting It Out Of The Ballpark: Before the open, the company reported first-quarter earnings of $3.79 per share, which beat the analyst consensus estimate of $1.12. This is a 413% increase over losses of $(1.21) per share from the same period last year. Also, it had a major sales beat with $2.92 billion versus $2.18 billion estimates.

There was more good news with raised guidance and the announcement that the company plans to repurchase a minimum of $200 million of Its common shares.

PreMarket Prep Take And Price Action: When the issue was being covered on show, it was already in the green by over $6 at the $90.50.area. Dennis Dick was planning to avoid the issue in the session.

“These are blowout numbers, but I am not it can get any better than this," he said. "It go either way off this report and I am not going to guess which way.”

The author of this article noted the only potential resistance being its all-time high from May 10 at $91.80.

As it turns out, the former all-time was actually support. After a higher open, it retreated to $91.37 and then was off to the races. It rallied all the way to $99.70 and backed off to close at $98.40, good for a 16.7% gain on the day.