Water-Logged And Getting Wetter: 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 Dick's Sporting Goods ( DKS) as a "water-logged and getting wetter" (weak stocks crossing below support 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 $55.5 million.
  • DKS has traded 4.9 million shares today.
  • DKS traded in a range 201.7% of the normal price range with a price range of $1.93.
  • DKS traded below its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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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 19.2. Currently there are 14 analysts that rate Dick's Sporting Goods a buy, 1 analyst rates it a sell, and 5 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 $5.1 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.32 and a short float of 6.9% with 5.32 days to cover. Shares are down 8.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dick's Sporting Goods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, attractive valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DICKS SPORTING GOODS INC has improved earnings per share by 7.8% in the most recent quarter compared to the same quarter a year ago. 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 ($3.08 versus $2.70).
  • Net operating cash flow has increased to $461.57 million or 30.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.54%.
  • The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 6.8% when compared to the same quarter one year prior, going from $129.75 million to $138.64 million.

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