The dominating player with the most expensive valuation
At the current trading price of around $45 per share, Dick’s Sporting Goods is worth about $5.6 billion on the market. The market values the company at 9.6 times EV/EBITDA. Compared to its peers including Foot Locker, Inc. (NYSE:FL) and Finish Line Inc (NASDAQ:FINL), Dick’s Sporting Goods seems to have the most expensive valuation. Foot Locker, at a current trading price of around $33 per share, has the total market cap of more than $5 billion. It is valued at only 5.72 times EV/EBITDA, a much cheaper valuation. The smallest company among the three is Finish Line Inc (NASDAQ:FINL). It is trading at nearly $19 per share, with a total market cap of more than $920 million. It is also valued the cheapest, at 4.85 times EV/EBITDA. The highest valuation of Dick’s Sporting Goods might be due to its fast growth earnings. In addition, it is the dominating player, with a 8.5% market share in the U.S. sporting-goods market, while Foot Locker, Inc. (NYSE:FL) owns around 6% market share.
Among the three, Foot Locker generated the highest operating margin at more than 10%, while the operating margins of Dick’s Sporting Goods and Finish line were 8.8% and 8.63%, respectively. Dick’s Sporting Goods pays to existing shareholders the lowest dividend yield at 1.1% while the dividend yield of Foot Locker, Inc. (NYSE:FL) is the highest, at 2.2%, and Finish Line Inc (NASDAQ:FINL) pays 1.4% dividend yield.
My Foolish take
Even after a daily significantly drop of nearly 11%, Dick’s Sporting Goods does not seem to be cheap. I personally think it is still relatively overvalued compared to its peers. I would rather wait for a much cheaper price before initiating a long position in this stock.
The article Is This Sporting Goods Retailer a Buy After an 11% Daily Drop? originally appeared on Fool.com and is written by Anh HOANG.
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