Williams Trading Bullish on Dick's Sporting Goods Ahead of Q1 Earnings

Williams Trading analysts reaffirmed their Buy rating and a $235 price target on Dick's Sporting Goods (NYSE:DKS) ahead of the company’s Q1/24 earnings release on Wednesday, May 29th. Despite expected short-term challenges, the analysts advised buying the stock. They noted that consensus estimates do not fully account for the following factors: first, the gross margin pressures from elevated "shrink rates" will begin to ease in Q2/24 as year-over-year comparisons become more favorable; second, there are SG&A pressures due to significant marketing campaigns for House of Sport store openings.

As a result, the analysts adjusted their Q1/24 EPS estimate from $3.03 to $2.85 to better reflect these margin and expense pressures. The analysts remain confident that Dick's Sporting Goods is successfully capturing market share from department stores in active apparel, particularly among women, and from some athletic specialty retailers, thanks to improved merchandise assortments and better digital and store execution. While the digital experience continues to outperform the in-store experience, the stores are showing progress.