NEW YORK (TheStreet) -- Shares of Dick's Sporting Goods Inc. (DKS) - Get Dick's Sporting Goods, Inc. Report are down by 5.68% to $52.01 at the start of trading on Friday, following a report from the New York Post suggesting the company is likely not to be sold as CEO Edward Stack, whose family owns most of the retailer's voting stock, wants to maintain control of the business.
Recently, Dick's Sporting Goods invited private equity bidders to research the company but the firms aren't interested in spending money on the $6.6 billion chain without being in control, sources told the Post.
On January 7, Reuters reported that Dick's was in the early discussions with private equity firms regarding a sale, which sent the stock higher.
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"I haven't found any tier one private equity firms that have had any conversations," the Post's sources added.
Demand from the Stack family to remain in control of Dicks was a main reason firms would not get into serious purchase discussions, but sources told the Post that the stock's recent rally may have made the company too pricey.
Separately, TheStreet Ratings team rates DICKS SPORTING GOODS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DICKS SPORTING GOODS INC (DKS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.9%. 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 -6.36%.
- 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 analysis from the report here: DKS Ratings Report