Why Dick's Sporting Goods (DKS) Stock Plunged to a One-Year Low Today

NEW YORK (TheStreet) -- Dick's Sporting Goods  (DKS) plunged more than 18% to a one-year low of $43.51 on Tuesday after the company reported first-quarter earnings that came up short of analysts' expectations.

The company reported adjusted earnings per share of 50 cents, compared to the Thomson Reuters consensus estimate of 52 cents a share. Revenue totaled $1.44 billion, which came up short of analysts' expectations of $1.46 billion.

Dick's also forecast second-quarter EPS guidance of 62 cents a share to 67 cents a share, but the consensus estimate called for 82 cents a share. The company also expects second-quarter comparable-store sales up 1% to 3%. Dick's further expects to open approximately eight new Dick's Sporting Goods stores and one new Field & Stream store and to relocate three Dick's Sporting Goods stores in the quarter.

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Finally, Dick's expects full-year adjusted earnings per share of $2.70 to $2.85, compared to the consensus estimate of $3.08. The company expects full-year comparable-store sales up 1% to 3%. Dick's also expects to open 50 new Dick's Sporting Goods stores, relocate five stores and remodel five stores in the full year. It further expects to open eight new Field & Stream stores, relocate two Golf Galaxy stores and open one new Golf Galaxy store.

The stock closed down 17.98% to $43.60 on Tuesday.

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 some important positives, 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, 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 analysis by TheStreet Ratings Team goes as follows:

  • 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.
  • You can view the full analysis from the report here: DKS Ratings Report

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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.

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