DICK’s Sporting Goods Inc. (NYSE: DKS) reported its earnings and sales results for Q4 and full-year 2021 ending January 29, 2021, on Wednesday, March 8, 2022, in which the company topped estimates as the company generated massive gains attributed to pandemic shopping of fitness accessories and outdoor equipment.
What to look for: The company gave a better than anticipated 2022 comparable store sales and earnings, which is indicated as the foundation for future growth post-pandemic. In addition, CEO Lauren Hobart indicated that they are experiencing robust consumer demand, and the 2022 guidance forms a foundation to build on despite growing global uncertainty.
Earnings: Stockearning’s Estimated EPS was pegged at $3.43 per share, but the company produced actual adjusted EPS of $3.64 per share. Net income for the fourth quarter was $346.1 million or $3.16 per share relative to net income of $219.6 or $2.21 per share a year ago. In the third quarter, the company produced a 61.11% earnings surprise with an EPS of $3.19 versus an estimated EPS of $1.98. Historical EPS Performance for the past 12 quarters shows that the company has topped estimates 25 times (69%), total meet four times (11%), and missed seven (19%). The company expects adjusted EPS of $11.7 to $13.1 per share for the full year, with analysts expecting $11.31.
Revenue: The company reported revenue of $3.35 billion in Q4 2021, topping estimates of $3.31 billion. Revenue was up 7.3% from last year's revenue of $3.13 billion, and on a two-year basis, the company saw its sales grow 28.5%. In addition, same-store sales were up 5.9%, beating the 4.3% that analysts had predicted. The company had net sales of $12.29 billion for the full year, a 28.3% increase from FY2020.
Stock movement: DKS shares have lost 29.1% since the company released its last earnings release. Interestingly, following the earnings release, the company’s shares have been UP 25 times in the past 48 quarters. So, the historical price reaction suggests a 52% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-6%, while the predicted volatility on the seventh day is +/-8%.
What analysts are saying: Baird analyst Justine Kleber slashed his price target on the stock from $125 to$115 to show multiple compression across discretionary retail but maintained a Hold rating on the shares. In a research note, the analyst told investors that while Dick's Q4 results were better than anticipated, the market is apprehensive about considerable P&L contraction as support is cycled and rising inflation squeezes consumers.
Truist analyst Beth Reed raised her price target on the stock from $161 to $168 and maintained a Buy rating on the shares. In a research note, the analyst told investors that the firm's post-Christmas update would allay investor fears about decreasing traffic trends and sales during the peak holiday shopping season. Reed added that she continues to see many long-term tailwinds for Dick's and believes that in the post-pandemic scenario, sales and profitability has been reset higher.
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