PreMarket Prep Stock Of The Day: Dick's Sporting Goods

There are good and bad days to report earnings. After Monday’s late-day tumble and index futures trading in the red in the premarket, Tuesday was a bad day to report.

Unfortunately, for Dicks Sporting Goods Inc DKS, it was time to report third-quarter earnings. The price action following the report makes it the PreMarket Prep Stock of the Day.

Yesterday Seems So Far Away: Similar to the S&P 500 index, Dick’s made a new all-time high in Monday’s session, reaching $142.78. Unlike the index, it posted a new all-time closing high at $140.28.

Sellers Lurking At The $140 Area: When institution(s) exit an issue at a particular price area, it takes days, weeks and even months to exit at the desired area. From the monthly charts, it is apparent that were sellers at the $140 area going back to August, when it peaked at $139.24 and ended the month at $135.31.

Early in September, it peaked at $141.89 and faltered to end the month at $119.77. The issue only reached $128.86 in October and ended the month at $124.21.

On Thursday and Friday, the issue peaked at $140.34 and $140.50, respectively. On Monday, with the $140 sellers mopped up, the issue went on to post a new all-time high at $142.78.

A Q3 Beat And Raised Guidance: Before the open Tuesday, the company reported quarterly earnings of $3.19 per share, which beat the analyst consensus estimate of $1.95 by 63.59%. This is a 58.71% increase over earnings of $2.01 per share from the same period last year.

The company reported quarterly sales of $2.75 billion, which beat the analyst consensus estimate of $2.49 billion by 10.44%. This is a 14.01% increase over sales of $2.41 billion in the same period last year.

Also, the company expects FY21 adjusted EPS of $14.60-$14.80 (from a prior view of $12.45-$12.95), against the consensus of $13.13 and FY21 sales of $12.12 billion-$12.19 billion (prior view $11.52 billion-$11.72 billion) versus the consensus of $11.84 billion.

PreMarket Prep's Take: When it was being covered on the show, it was trading at the $137.50 area, which was lower by nearly $3. Co-host Dennis Dick asked: ”Is this as good as it gets?” He added: “they did nothing wrong in the quarter and the Street wonders if it can do any better and sells it.”

The author of this article identified the pair of lows from last week at the $133 area as a potential support area.

DKS Price Action: Off the shaky start for the market, $133 ended up being resistance instead of support. After a lower open ($133.03), it continued lower, bounced off $126.74 and rebounded back to $134.41. At that point, it was engulfed with sellers and traded down to $123.30, which filled a gap (void in price), that was at $125.06 from its Nov. 2 session.

The steep discount from Monday’s price attracted a slew of buyers. The rebound off that low took the issue to a new high for the session at $134.79. 

The stock was trading down 4.62% at $133.80 ahead of the close. 

The discussion on the issue from Tuesday’s show can be found here: