Dick's Sporting Goods has nearly tripled in 2021
Specialty retailer Dick's Sporting Goods, Inc. (NYSE:DKS) will report third quarter earnings before the market opens on Tuesday, November 23. Ahead of the event, DKS up 1.6% to trade at $140.89 and within a chip-shot of record highs, making tomorrow's price action even more intriguing.
Dick's has quite the history of positive post-earnings reactions. In the last two years, seven of the last eight quarterly reports have resulted in a post-earnings move to the upside. This includes impressive bull gaps of 13.3% last August, and 16.9% back in May. This time around, the options market is pricing in a post-earnings move of 13.5%, higher than the average post-earnings return of 9.9% in the last two years, regardless of direction.
DKS deserves a trophy for the year its had on the charts. The stock is up 157% year-to-date, and one solid post-earnings bull gap from clearing its Sept. 7 record high of $141.35. Along the way, the shares' 80-day moving average has contained the sharper pullbacks.
A short squeeze could help the equity reclaim those record highs; although short interest is down 32% in the two most recent reporting periods, a healthy 16% of DKS' total available float is still sold short.
Dick's Sporting Goods also offers a forward dividend of $1.75 with a dividend yield of 1.26% and currently trades at a solid price-earnings ratio of 11.37 and price-sales ratio of 1.18, despite the company's incredible growth this past year. Dick's Sporting Goods did so by growing its trailing 12-month revenues 22% and its trailing 12-month net income 136.5% in comparison to fiscal 2020. The sporting goods retailer has also increased its revenues 36.5% and its net income 288% since fiscal 2017.
Dick's Sporting Goods is expected to see a significant decrease in earnings over the coming year, with analysts placing a forward price-earnings ratio of 17.76 on Dick's stock. DKS also experienced a 2% decline in annual revenues for fiscal 2018 and an 8% drop in annual net income between fiscal 2017 and fiscal 2019, placing doubts on Dick's stock's current valuation.
Although Dick's Sporting Goods has maintained an overall positive growth rate, it is unlikely that its valuation will hold in the short-term without DKS strongly beating expectations in the coming quarters. Nonetheless, Dick's stock continues to be a promising long-term investment from a fundamental point of view.