This Sports Retailer Has Weathered the Pandemic Well

DKS has more than tripled off its 11-year lows from March

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American sporting goods retailer Dick’s Sporting Goods, Inc. (NYSE:DKS) primarily sells brand name sporting equipment, apparel, and footwear. DKS is currently riding a pretty bearish trend, and has been for a full month. DKS stock has dropped about 17% in just the past month. Nonetheless, the stock has held onto its year-to-date breakeven level and is up a massive 278% over its 11-year low of $13.46 on March 18.

Using Schaeffer's robust historical database, we conduct extensive research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options. In doing so, each stock is given a Schaeffer's Volatility Scorecard (SVS) ranking. DKS is currently sporting a ranking of 80 out of 100. A high SVS reading indicates that DHI stock has consistently delivered bigger returns than its options implied volatility (IV) levels have predicted, meaning it may be a strong candidate for premium-buying strategies going forward. 

Dick's Sporting Goods has beat expectations on three of its four most recent earnings reports. In the fourth quarter of 2019, Dick's Sporting Goods reported an earnings beat and outperformed expectations by $0.14. In the first quarter of 2020, Dick's Sporting Goods increased its EPS to $1.32, which was also representative of a $0.10 earnings beat. The company dropped its reported EPS in a major way in the second quarter of 2020, missing expectations by $1.14.  As for Dick's Sporting Goods' upcoming earnings report, the company is expected to report a drop its EPS down $0.97. This earnings report is slated to for release next week on Tuesday, November 24 before the open.

Dick's Sporting Goods has a forward dividend of $1.25 and a dividend yield of 2.46%. The last dividend Dick's Sporting Goods paid was for $0.313 per share. The company has grown its dividend since 2013.

Dick’s Sporting Goods has largely outperformed expectations during this pandemic. The company only had one quarter where it took a loss on its earnings, and that was followed by one of its best earnings reports in recent times, a 15.7% post-earnings pop. It actually appears that the pandemic has made Dick’s Sporting Goods a much more attractive value play for investors, rather than destabilizing it like one might assume. Prior to the COVID-19 outbreak, Dick's Sporting Goods had little revenue growth, inconsistent net income growth, and a mediocre balance sheet. However, the company has now proven that it can weather unprecedented events with, not only stability, but growth. Furthermore, DKS stock currently trades at an amazing forward price-earnings ratio of 11.61.  As fears of the economy closing down again continue to rise, DKS will likely continue to have expected weakness, further pushing the entry price for value investors down.


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