Shares of Dick's Sporting Goods (DKS) were up over 3% on heavy trading volume in early afternoon trading Monday ahead of the release of the sports retailer's third quarter results before Tuesday's opening bell.
While the company's recent acquisitions will help boost its bottom line, there are issues with the company's balance sheet, analysts say.
The Corapolis, PA-based company is expected to report earnings of $0.42 per share on revenue of $1.8 billion. Those totals are compared to the $0.45 per share and $1.64 billion in revenue the company reported a year ago. At the time analysts were expecting Dick's to report earnings of $0.46 per share on revenue of $1.66 billion.
Dick's has been on an upward trajectory for most of the year, rising more that 75% year to date, despite some hiccups along the way. The stock was hurt earlier this year after rival The Sports Authority declared bankruptcy and began liquidating its inventory.
Investor confidence in Dick's returned, however, after it became clear that Dick's would be the main beneficiary from TSA's demise after it purchased the company's name and related intellectual property for $15 million, while paying an additional $8 million to purchase 31 of the company's more than 460 stores.
Dick's wasn't done taking over competitors though, acquiring the now defunct golf equipment retailer Golfsmith in October for a reported $70 million. Dick's plans to keep at least 30 of the company's stores open while winding down the remaining 109 through liquidation.
Analysts at Canaccord Genuity believe that the company's acquisitions bode well for its third quarter results, reiterating a Buy rating and $70 price target, representing a potential 15% upside from the stock's previous closing price of $59.44.