Barbarian At The Gate: Dick's Sporting Goods (DKS)
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Dick's Sporting Goods as such a stock due to the following factors:
- DKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.0 million.
- DKS has traded 993,639 shares today.
- DKS traded in a range 334.6% of the normal price range with a price range of $3.68.
- DKS traded above its daily resistance level (quality: 257 days, meaning that the stock is crossing a resistance level set by the last 257 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on DKS:
Dick's Sporting Goods, Inc. operates as a sports and fitness retailer primarily in the eastern United States. The company provides hardlines, including sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing gear products; apparel; and footwear products. The stock currently has a dividend yield of 1%. DKS has a PE ratio of 18.7. Currently there are 9 analysts that rate Dick's Sporting Goods a buy, no analysts rate it a sell, and 12 rate it a hold.
The average volume for Dick's Sporting Goods has been 1.4 million shares per day over the past 30 days. Dick's Sporting Goods has a market cap of $4.7 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.54 and a short float of 4.7% with 4.11 days to cover. Shares are down 0.8% year-to-date as of the close of trading on Tuesday.
Analysis:
rates Dick's Sporting Goods as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to -$49.46 million or 21.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.38%.
- DICKS SPORTING GOODS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DICKS SPORTING GOODS INC increased its bottom line by earning $2.70 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.70).
- DKS's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.14 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full Dick's Sporting Goods Ratings Report.
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