Are Dick's Sporting Goods' Q3 Results Enough to Keep Investors Happy?

Dick’s Sporting Goods Inc. (NYSE: DKS) reported third-quarter 2020 results before markets opened Tuesday. The sporting goods retailer reported adjusted diluted earnings per share (EPS) of $2.01 on revenues of $2.41 billion. In the same period a year ago, the company reported EPS of $0.52 on revenue of $1.96 billion. Third-quarter results also compare to consensus estimates for EPS of $1.01 and $2.23 billion in revenue.

On a GAAP basis, EPS came in at $1.84 compared to $0.66 in the same quarter last year. The company said that it incurred approximately $0.37 per share in costs related to compensation and employee safety due to the COVID-19 pandemic.

Same-store sales rose by 23.2% year over year, fueled by a near-doubling of e-commerce sales. E-commerce accounted for about 21% of total net sales in the quarter, up from 13% a year ago.

In a separate announcement, Dick’s said that CEO Edward Stack would assume the role of executive chairperson on February 1. Lauren Hobart, currently the company’s president, would take over as president and CEO on that date. Hobart joined the company in 2011 as chief marketing officer, after a 14-year career at PepsiCo. She was appointed president in 2017 and named to the company’s board in 2018.

In her comments about third-quarter results, Hobart said that the company’s brick-and-mortar stores “drove 90% of our total Q3 sales growth, whether an athlete purchased at the register, picked up curbside or had their order delivered through ship-from-store.”

CEO Stack noted that same-store sales through the first three weeks of the company’s fourth-quarter have risen in the high-teens on a percentage basis.

The company withdrew fiscal year guidance in March and did not supply an updated outlook for the quarter or the year. The consensus analyst estimate for fourth-quarter EPS is $1.49 on sales of $2.84 billion. For the full year, analysts are looking for EPS of $4.06 and sales of $9.1 billion.

For the first nine months of the year, Dick’s has posted adjusted EPS of $3.65. If the company hits the consensus fourth-quarter estimate, full-year earnings will come in at around $5.14, more than 20% higher than the current full-year estimate.

Shares traded down fractionally Tuesday morning to $58.79, in a 52-week range of $13.46 to $63.29. The consensus price target on the stock is $63.74, implying a potential gain of more than 6% to the price. Dick’s pays a dividend yield of 2.14%.

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