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Dick’s Sporting Goods: Most Analysts Rate the Stock a ‘Hold’

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Rating summary

Ahead of Dick’s Sporting Goods’ (DKS) upcoming fiscal 4Q17 results, most analysts have maintained a “buy” rating. Of the 31 analysts covering the stock, 61% have recommended a “hold,” 29% have recommended a “buy,” and the remaining 10% have recommended a “sell.”

Dick’s Sporting Goods is a leading sporting goods retailer. However, a drastically altered retail landscape and the growth of online retailers and subsequent price wars have resulted in subdued profitability. Like most conventional retailers, Dick’s is investing in its online channel as well as leveraging stores to better meet customer demands. These factors are likely to boost its long-term performance.

Analysts expect the company to report a 10.1% growth in sales compared with fiscal 4Q16, but adjusted EPS (earnings per share) is expected to fall 9.1% to $1.20.

Currently, analysts’ 12-month average target price for Dick’s Sporting Goods stock is $35.15, which reflects a 10.6% upside as of March 7, 2018.

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Peer ratings

Of the 20 analysts covering Foot Locker (FL), 33% have given it a “hold” rating. For Finish Line (FINL), 67% of the 15 analysts covering the stock have given it a “hold” rating. For Hibbett Sports (HIBB), 57% of the analysts covering the stock have recommended a “hold.”

Currently, analysts’ target price for Foot Locker is $51.68, reflecting a 26.9% upside to the price of its stock on March 7, 2018. For Finish Line, its mean target price is $12.67, which indicates a 21.1% upside to its price on March 7. For Hibbett Sports, its target price is $26.81, implying a 6.6% upside to its price on March 7.

Valuation overview

On March 7, 2018, Dick’s Sporting Goods was trading at a 12-month forward PE (price-to-earnings) ratio of 11.5x. In comparison, Finish Line, Foot Locker, and Hibbett Sports were trading at 12-month forward PE ratios of 13.6x, 9.1x, and 12.7x, respectively, that same day.

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