Shares of Dick’s Sporting Goods (DKS - Analyst Report) were up as high as 8% in morning trading Tuesday after the company reported better-than-expected Q2 earnings.
Based in Coraopolis, PA, DKS is a sporting goods retailer that is present primarily in the eastern United States, although it has locations across the country. Coming into the earnings report, shares of the company were up 54.5% year-to-date.
The Results
The company reported its Q2 2016 earnings before market open on Tuesday, posting $0.82 in earnings per share and $1.97 billion in revenue. These beat our Zacks Consensus Estimates of $0.68 and $1.89 billion respectively.
Along with the top and bottom line beats, the company announced that it repurchased $57 million in stock during Q2 and raised its full-year 2016 earnings per diluted share guidance to $3.05 from $2.90. DKS saw a 2.8% increase in consolidated same store sales during Q2, compared to the company’s guidance of between -4% and -1%.
Furthermore, the company plans to open approximately 36 new stores and relocate nine stores in 2016, the majority of which is expected to occur in Q3.
DKS reported alongside TJX Co. (TJX - Analyst Report) and Home Depot Inc. (HD -Analyst Report) , both of which also beat earnings expectations.
Moving Forward
Although the retail industry as a whole has seen difficulty in recent times due to currency headwinds and shifting consume behavior, DKS is now coming off of its second-straight earnings beat. It plans to convert some former The Sports Authority (TSA) locations to Dick’s Sporting Goods stores, although it has not yet fully determined which leases to extend and which to let expire.
Sports Authority closed all of its 450 locations back in May. As our team highlighted at the time, this leaves companies like DKS with the potential to capitalize on a larger share of the market. The company has seen numerous positive earnings estimate revisions in the last 60 days, and will likely continue to tick upwards as analysts digest Tuesday’s news.
Bottom Line
Although retailers continue to face danger from Amazon Inc. (AMZN -Analyst Report) and the world of e-commerce in general, DKS offers a unique experience. To visit the brick-and-mortar store and try out that baseball glove or bicycle is something that one cannot do with a click on the computer.
This is a key point that we discussed in our piece on why Amazon can’t kill brick-and-mortar stores. As consumers continue to become more health-conscious, a company like DKS is poised for further growth. Although investors should certainly remain wary of the many headwinds that retailers face, they should still keep an eye on this company moving forward.
Dick’s Sporting Goods currently sits at a Zacks Rank #3 (Hold), although this could be subject to change in the days to come.
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