Dick’s Sporting Goods increased it guidance for the 4th quarter and FY09. The company jacked up EPS guidance to AT LEAST 54 cents from a previous estimate of 41 to 46 cents. This would bring FY09 EPS to at least $1.17 versus $1.19 last year. Given the fact that the golf business is in a cyclical recession, these are excellent results. I would not that DKS has bettered analysts’ estimates for the past 4 quarters. With this announcement we have to consider it a 5th consecutive beat.
Furthermore, same store sales are expected to decline only 2% rather than a 3 to 4% drop that was previously expected.
The company’s FY10 should return the company to the double digit growth that we were accustomed to prior to the Great Recession. DKS is the dominant independent sporting goods and apparel retailer in the country. There is still plenty of geography into which DKS can continue to expand for several years.
I began purchasing DKS upon its IPO several years ago. I constantly add to DKS upon receiving new client assets for our accounts at LakeView Asset Management, LLC. DKS might not be as exciting as a fast growing teen retailer but it is also far more stable.
I would also point out that sales of Jets merchandise soared as the football team made its run to the AFC championship. The company has 19 stores in the states of Indiana (17) and Louisiana (2) which houses the teams participating in the Super Bowl. The company currently operated 420 stores in 40 states.
Currently, I am valuing DKS at $28.5 or 22 times my expected FY10 EPS of $1.30.
At the time of this Blog entry Scott Rothbort, his family and or
clients of LakeView Asset Management, LLC was long shares of DKS ---
although positions can change at any time.
For more information on investing with LakeView Asset Management, LLC please visit the company's website
Posted By Scott Rothbort at January 27, 2010
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