Citi has adjusted its outlook on Dick's Sporting Goods (NYSE: NYSE:DKS), reducing the price target to $230 from the prior target of $243, while maintaining a Neutral rating on the stock.
The firm cited that the retailer's second quarter was solid, with comparable store sales up by 4.5%, gross margin expanding by 230 basis points, and fiscal 2024 guidance increased from $13.35-$13.75 to $13.55-$13.90.
Despite these positive results, the analyst noted that the performance and guidance did not meet the high expectations of the market.
The report highlighted concerns for the second half of the year, suggesting that earnings per share (EPS) upside could be more limited. Factors such as the calendar shift turning into a headwind, which was a significant benefit in the second quarter, and expectations for comparable store growth to slow down to low single digits from mid single digits in the first half, are anticipated to affect the company's performance.
Management's plan to invest more in strategic investments was seen as potentially positive, but the report also pointed out the possibility of a weakening macroeconomic environment and tougher sales comparisons as sources of uncertainty.
The company's management, however, expressed optimism about back-to-school trends and the success of its House of Sport strategy, which may offer some upside to the second half comparable store guidance.
In other recent news, Dick's Sporting Goods' earnings per share (EPS) rose 55% year-over-year to $4.37, exceeding both Telsey's estimate of $3.85 and the FactSet consensus of $3.86. The retailer also reported a 7.8% increase in sales to nearly $3.5 billion, with comparable sales up by 4.5%.
Following these results, Telsey Advisory Group maintained its Outperform rating on the company, keeping the price target steady at $260.00. In parallel, Jefferies updated its outlook, raising the price target to $225.00 from the previous $221.00, while maintaining a Hold rating.
In terms of future projections, Dick's Sporting Goods raised its non-GAAP EPS guidance for 2024 to a range of $13.55 to $13.90, up from the previous forecast of $13.35 to $13.75. The company also increased its comparable sales outlook for 2024 to between 2.5% and 3.5%, up from the earlier range of 2.0% to 3.0%.
InvestingPro Insights
As Dick's Sporting Goods (NYSE:DKS) navigates the market with strategic investments and an optimistic outlook on back-to-school trends, real-time data from InvestingPro offers further insights into the company's financial health and stock performance. With a market capitalization of $17.99 billion and a Price/Earnings (P/E) ratio of 17.4, the company demonstrates a solid financial standing. Notably, the P/E ratio has adjusted slightly lower to 16.63 over the last twelve months as of Q1 2023, which may appeal to investors looking for value in earnings.
InvestingPro Tips indicate that Dick's Sporting Goods has been trading at a high P/E ratio relative to near-term earnings growth, suggesting that investors are pricing in optimistic future earnings. Additionally, the company's stock price movements have been quite volatile, which could be a consideration for risk-averse investors. On the positive side, Dick's Sporting Goods has a track record of maintaining dividend payments for 14 consecutive years, with a recent dividend yield of 1.99% and a dividend growth of 10.0% over the last twelve months as of Q1 2023. These metrics, coupled with a strong one-year price total return of 102.28%, highlight the company's potential for delivering shareholder value.
For investors seeking a comprehensive analysis, there are several additional InvestingPro Tips available, providing a deeper dive into the company's performance and future prospects. Visit InvestingPro for more information on Dick's Sporting Goods, including an extensive list of tips to guide your investment decisions.
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