Will Dick’s (DKS) Break Out to New High on its Q4 Report

What's Happening With DKS View more about DKS >

Dick’s Sporting Goods (DKS) stock is trading just shy of its 52-week high ahead of its March 12 fourth-quarter report. Analysts expect the sporting goods retailer to post earnings of $1.07 per share on revenue of $2.48 billion. During the same period last year the company earned $1.22 on revenue of $2.66 billion and the stock is up 20.5% since the start of the year.

Technical Analysis

DKS was recently trading at $37.51 down $3.36 from its 12-month high and $7.98 above its 12-month low. InvestorsObserver’s Stock Score Report gives DKS a 80 long-term technical score and a 87 short-term technical score. The stock has recent support above $35 and recent resistance below $40.75. Of the 17 analysts who cover the stock 5 rate it Strong Buy, 0 rate it Buy, 12 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, DKS gets a score of 70 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

Dick’s has posted positive earnings surprises each of the last five quarters, but the company has missed estimates on the top line each of the last two quarters. Despite the back to back revenue misses Wall Street remains upbeat on the stock which is currently just shy of its 52-week high. DKS stock recently formed a head and shoulder’s pattern, so there is a risk for a big sell off if the company is not able to hit its earnings estimate. The street does not expect a miss and has a whisper number of $1.09 for the quarter. Retailers have been doing OK this earnings season, and a strong overall economy and consumer confidence should keep the market bullish on retailers for the time being.

DKS stock currently trades at just 11 times earnings and future earnings, which is attractive, but given the company is only expected to grow earnings by 0.4% annually over the next five years the valuation will not be enough to push the stock significantly higher unless Dick’s is able to consistently top estimates and show better than expected bottom line growth. The street expects a small beat, which should help the stock break hit a new high, but given the recent technical pattern, and the muted growth estimates current shareholders should have an exit strategy in place just in case the quarterly numbers disappoint and the stock turns lower.

About Dick's Sporting Goods Inc

Dick's Sporting Goods retails athletic apparel, footwear, and equipment for sports. Dick's operates about 730 stores under its own name and another 130 specialty stores under Golf Galaxy and Field & Stream names. Dick's also operates e-commerce sites including youth sports site Team Sports HQ. Dick's carries private-label merchandise and national brands such as Nike, The North Face, Under Armour, Callaway Golf, and TaylorMade. Based in the Pittsburgh area, Dick's was founded in 1948 by the father of current chairman, CEO, and controlling shareholder Edward Stack.

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