Dicks Sporting Goods Inc (DKS), Hibbett Sports, Inc. (HIBB), Cabelas Inc (CAB): Is It Finally Time to Buy Sports Retail?

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Billionaire David Einhorn didn’t explicitly say “yes, now is the time to buy sports retailers.” Nonetheless, an industry leader got a big positive last week when Einhorn’s Greenlight Capital hedge fund announced it was closing out its short position on this stock.

(NYSE:DKS) is the sports and fitness specialty retailer that offers a range of sporting-goods equipment, apparel and footwear. Dick’s also owns Golf Galaxy, a golf specialty retailer.

Einhorn notes that the fear of Internet retail taking market share from Dicks Sporting Goods Inc (NYSE:DKS) has not come to fruition per his 2Q investor letter…

Dicks Sporting Goods Inc (NYSE:DKS) saw revenue up 12% in fiscal 2012 (ended January), and analysts expect a 7% rise for fiscal 2014 — namely driven by the opening of 40 new Dick’s stores and remodeling of another 80. As Einhorn mentioned, Dick’s reported EPS in the April-ended quarter of $0.48 compared to $0.45 for the same period last year.

But the news wasn’t all bad. Gross profit for 1Q was up 4% year-over-year and the gross margin expanded eight basis points to 30.8%. Operating income also increased 2% year-over-year. For full year 2013, the company reaffirmed its EPS guidance of $2.84 to $2.86.

Analysts still expect the sporting goods company to grow EPS at an annualized 15% over the next five years. Dicks Sporting Goods Inc (NYSE:DKS) also has a solid balance sheet and cash flow that should still be appealing to investors. The company carries over $100 million in cash and has no debt.

Top comp

Hibbett Sports, Inc. (NASDAQ:HIBB) is one of Dicks Sporting Goods Inc (NYSE:DKS) chief peers, with stores in small- and mid-sized markets primarily in the Southeast, Southwest, Mid-Atlantic and Midwest. Hibbett has 873 stores across 29 states. Hibbett’s ultimate goal is to have 1,300 stores across the U.S. in the long term.

Hibbett Sports, Inc. (NASDAQ:HIBB) is looking to open some 75 new stores in fiscal 2014, which should help drive the expected 6% rise in revenue. Hibbett focuses on towns with populations between 25,000 to 75,000, operating more as a “local” sports store. This also gives it a competitive advantage, where many rivals, such as Dick’s, tend to avoid these markets.

Much like Dick’s, Hibbett Sports, Inc. (NASDAQ:HIBB) a debt-free balance sheet. It had over $100 million in cash as of the end of 1Q. Recent news for Hibbett Sports, Inc. (NASDAQ:HIBB) includes its 2Q EPS of $1.00, below $1.07 consensus estimates. It appears the miss was largely due to a cooler-than-expected spring season. The company is maintaining its fiscal 2014 expectations of EPS between $2.85 and $3.05.

Niche operator

Cabelas Inc (NYSE:CAB) is a specialty retailer focusing on fishing, camping and related outdoor activities. The company has 37 retail stores in 24 states and three in Canada. Its stores account for two-thirds of sales, with its direct business (catalogs) and the Internet generating the remainder.

Analysts expect the company to grow revenue by an impressive 18% in 2013, after being up 11% in 2012. Second-quarter EPS was also robust, coming in at $0.62 versus $0.47 for the same period last year. The big driver of this was 10.5% growth in same-store sales, as sales of firearms/ammo were up noticeably.

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