Dick’s Sporting Goods Inc. (NYSE: DKS) is set to expand with new store openings in Scottsdale, Arizona; Mobile, Alabama; Sacramento, California; and Valparaiso, Indiana. The Scottsdale location will open on July 17, 2015, the Mobile location will open on July 26, 2015 and the Valparaiso location has advertised to fill 23 hourly positions, with a yet unannounced opening date. Sacramento plans are still in development stages.
In an effort to boost sales figures, Dick’s continues to open new locations. The sporting goods retailer sold $6.81 billion in goods in fiscal 2015 and is expected to sell $7.42 billion goods in fiscal 2016. The represents modest growth of 8.80 percent year-over-year.
Steady Growth Forecast
Consensus analyst estimates call for Dick’s to report earnings per share growth of 11.90 percent and 14.60 percent for the current and coming quarters. Dick’s is forecast to grow EPS figures by 10.80 percent this year and 11.30 percent next year. Over the next five years, Dick’s Sporting Goods is forecast to grow EPS figures at an average rate of 13.98 percent annually. For the past five years, EPS numbers have grown by an average of 17.46 percent a year.
Sales and profit growth have been slowing, yet Dick’s Sporting Goods continues to slowly expand. Dick’s is very well capitalized, with $81.41 million in cash and $57.52 million in debt, resulting in a reasonable debt to equity ratio of 3.30 percent. The company has a market capitalization of $6.06 billion and 93.55 million shares outstanding. Dicks management has produced a healthy return on equity of 19.41 percent and return on assets of 10.37 percent.
Highly Competitive Retail Market
The highly competitive nature of sporting goods retail is evidenced by Dick’s thin operating and profit margins of 8.13 percent and 4.86 percent respectively. Foot Locker, Inc. (NYSE: FL) and Wal-Mart Stores, Inc. (NYSE: WMT) are seen as major competitors to Dick’s Sporting Goods. Shares of Dick’s and Foot Locker are both trading close to 52-week highs, while shares of Wal-Mart sit just below recent highs.
Dick’s shares closed on Friday at $51.19, some 15 percent below highs printed in April. Dick’s shares are up marginally for 2015. Shares of Dick’s have returned 1,148% since comping public in October 2002. The shares pay a dividend of $0.55, which equates to an annual yield of 1.10%. Nineteen brokers publish research following Dick’s Sporting Goods, which offer price targets that range between $50 and $68, with the mean target being $61.37.
The average analyst rating for Dick’s Sporting Goods is 2.4, where 0.0 represents a strong sell and 5.0 represents a strong buy. This view has decreased by 0.1 since last week. Dick’s employs over 12,000 workers throughout the United States, was founded in 1948, and maintains its head offices in Coraopolis, Pennsylvania.
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