Should You Buy the Dip at Dicks Sporting Goods Inc (DKS)? – Wal-Mart Stores, Inc. (WMT), Cabelas Inc (CAB)

Versus Competitors

Dick’s directly competes against Cabelas Inc (NYSE:CAB) and Hibbett Sports, Inc. (NASDAQ:HIBB), and is an indirect competitor to superstore Wal-Mart Stores, Inc. (NYSE:WMT), which also offers a wide selection of sporting goods. How does Dick’s fare against these companies on a fundamental basis?

Market Cap Forward P/E 5-year PEG Price to Sales (ttm) Debt to Equity Return on Equity (ttm) Profit Margin
Dick’s Sporting Goods $5.53 billion 15.45 1.38 1.10 1.33 16.65% 4.82%
Cabelas Incorporated $3.78 billion 15.10 1.07 1.24 180.89 13.57% 5.57%
Hibbett Sports $1.33 billion 17.01 1.18 1.73 1.05 32.54% 8.72%
Wal-Mart $243.75 billion 12.43 1.62 0.52 65.81 22.42% 3.62%
Advantage Wal-Mart Cabelas Wal-Mart Hibbett Hibbett Hibbett

Source: Yahoo Finance, March 12.

Hibbett, which is the smallest of Dick’s rivals, has the advantage of growth, enhanced by stronger margins, lower debt and better past performance. Meanwhile, based on 5-year PEG ratios – which can be inaccurate due to unforeseen macro factors – Cabelas Inc (NYSE:CAB) has a slight edge in growth. Yet Dicks Sporting Goods Inc (NYSE:DKS) is still a healthy company, with very low debt levels and cheap forward valuations.

A look at top and bottom line growth over the past three years also confirms this view.

DKS EBITDA TTM data by YCharts

All three sporting goods companies have posted strong top and bottom line growth over the past three years. The fact that Dick’s bottom line growth is outpacing its top line growth is also encouraging, since this usually indicates that margins are healthy and its operating model is efficient.

The Foolish Bottom Line

Although it appears that Dicks Sporting Goods Inc (NYSE:DKS) will have a rough year ahead, its fundamentals indicate that its long-term growth is still intact. Investors in Dick’s and its industry peers should remember that its industry is cyclical and can be swayed by weather conditions and macroeconomic problems. While the stock is down roughly 5% over the past 12 months, it has actually risen 70% over the past five years, and 700% over the past decade – which makes it a viable stock to buy and hold for the long run.

The article Should You Buy the Dip at Dick’s? originally appeared on and is written by Leo Sun.

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