Some excellent results were delivered by one of my oldest
holdings, Dicks Sporting Goods (DKS) this morning. DKS reported non-GAAP diluted
EPS of 32 cents versus 22 cents a year ago and expectations of 26 cents. Same
store sales rose 4.1% and total sales rose 9.3% year-over-year to $1.18 billion.
Analysts expected net sales of $1.16 billion in the 3rd quarter.
For FY2011 the company increased guidance by 7 cents for
non-GAAP EPS to a new range of $2.01 to $2.03. An additional penny was added to
4th quarter guidance for a range of 87 to 89 cents versus consensus estimates
of 87 cents. Toward the end of the 3rd quarter and in early 4th quarter DKS opened several new stores which are not in the current quarter’s
results but point to strong forward growth. A total of 25 new stores were opened
in the second half of 2011 bringing the total store count to 474 Dick's Sporting
Goods stores in 42 states and 81 Golf Galaxy stores in 30 states. As I
mentioned, there is still plenty of room for growth at Dick’s.
In what was a bonus announcement for shareholders, Dick’s
Sporting Goods’ board of directors declared an annual dividend of 50 cents
payable on December 28 for shareholders of record on December 7. In the future,
the company intends on paying dividends on a quarterly basis. At the 50 cent
payout, the yield is 1.26% based on yesterday’s closing price. However, it
appears that Dick’s Sporting Goods stock will open about 5% higher in trading
today.
As I mentioned, Dick’s Sporting Goods is one of my oldest
holdings. I still own stock from the IPO for several clients having bought more
stock on the opening day in the secondary market and for new clients thereafter.
I like the company’s business model, strategy, management team and balance
sheet. A year from now I have a preliminary price target in the range of $50 to
$52.50
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC was long DKS stock — although positions can change at any time.
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com
You can access more daily commentary from Scott Rothbort, on Wall Street All-Stars.
Posted By Scott Rothbort at November 15, 2011
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