Comparing PE (price-to-earnings) multiples for companies in the same sector helps investors make sound investment decisions. Forward PE multiples, which are stock prices divided by analysts’ earnings estimates for the next four quarters, are among the most used ratios for investment decisions.
As of April 13, 2018, Dick’s Sporting Goods (DKS) was trading at a 12-month forward PE ratio of 11.2x. Since its fiscal 4Q17 results release on March 13, 2018, its valuation multiple has fallen 3.7%. Dick’s Sporting Goods is trading at a lower valuation multiple than Hibbett Sports (HIBB) and Big 5 Sporting Goods (BGFV), which are trading at a 12-month forward PE ratios of 14.1x and 14.4x, respectively. On the other hand, Foot Locker (FL) was trading at ~10.0x as of April 13, 2018, lower than Dick’s Sporting Goods.
Analysts’ growth estimates
In fiscal 2018, analysts expect Dick’s Sporting Goods’ revenue to rise 1.0% to $8.7 billion, and its adjusted EPS to fall 3% to $2.92. The company’s EPS are expected to be impacted by promotional activities, ongoing investments, and the absence of an extra week in the year.
For Hibbett Sports, analysts project its fiscal 2019 revenue to fall 0.7% to $961.7 million and its EPS to rise 14.1% to $1.86. In fiscal 2018, analysts expect Foot Locker s revenue to fall ~1.0% to $7.7 billion, while its EPS are projected to rise 9% to $4.48. Analysts expect Big 5 Sporting Goods’ revenue to rise 0.2% to $1.0 billion in fiscal 2018, and its EPS to fall 3.6% to $0.54.
Dividend yields represent the cash flow an investor receives for each dollar invested in a company’s stock. Dick’s current dividend yield of 2.7% is based on its closing price of $32.86 as of April 13, 2018. In comparison, Big 5 Sporting Good’s (BGFV) current dividend yield is an impressive 7.7%, and Foot Locker’s (FL) is 3.1%. Hibbett Sports doesn’t pay dividends. Dick’s Sporting Goods’ last dividend hike came in February 2018, when it hiked its quarterly dividend by 32% to $0.23 per share, taking its annual dividend to $0.90.