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

Page 1 of 2

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.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!