Why Dicks Sporting Goods (DKS) Stock Was Downgraded By Several Analysts Today

NEW YORK (TheStreet) -- Shares of Dicks Sporting Goods Inc. (DKS) were downgraded today and cut to "neutral" at Goldman Sachs  (GS), Credit Suisse  (CS), JPMorgan  (JPM), and Piper Jaffray  (PJC), and raised at BMO Capital Markets.

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

Dick's also 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 to be up 1% to 3%.

In its note, JPMorgan reduced Dicks to 'neutral,' saying "while we believe the stock is oversold at its current price, we are downgrading...as the investment thesis has changed and tactically the poor back half set up is now accelerated."

BMO Capital increased its rating to "market perform" from "underperform." 

The stock closed down 17.98% to $43.60 yesterday, and is down 0.87% to $43.22 in pre-market trade.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

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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