Dick's Sporting Goods Raised Outlook After Strong Q1 Earnings, But Analyst Is Watching For Inventory Shrink Commentary

Goldman Sachs analyst Kate McShane reiterated a Buy rating on the shares of Dick’s Sporting Goods Inc DKS with a price target of $242.

DKS reported 1Q24 adjusted EPS of $3.30 vs. $3.40 a year ago, above consensus (Refinitiv) of $2.95, led by SSS of +5.3% (lapping +3.4% in 1Q23) vs. consensus of +2.4%, said the analyst.

DKS’s sales grew 6.2% year-on-year to $3.02 billion, beating the analyst consensus estimate of $2.94 billion.

The company’s gross margin was up +10 bps y/y at 36.3%, with  inventory level increasing by +5.5% y/y.

Dick’s Sporting Goods raised its FY24 EPS outlook from $12.85 – $13.25 to $13.35 – $13.75 versus the consensus of $13.25. 

The company also raised FY24 net sales guidance from $13 billion – $13.13 billion to $13.1 billion – $13.2 billion, against an estimate of $13.16 billion.

According to the analyst, the stock gained due to the earnings beat and higher 2024 guidance.

The analyst would be looking for more details about performance by category, brand, and quarter-to-date trends and expectations for the second quarter.

The analyst would also focus on any update on inventory shrink and commentary around raising 2024 guidance.

The price target of $242 is based on the analyst’s downside/base/upside case relative P/E multiples of 75%/80%/85%. 

BofA Securities analyst Robert Ohmes upgraded Dick’s Sporting Goods from Neutral to Buy and raised the price target from $225 to $240.

Price Action: DKS shares are trading higher by 15.9% at $226.10 at the last check Wednesday.

Photo via Wikimedia Commons