Dick’s Sporting Goods Inc (NYSE:DKS) stock fell nine percent following the company’s claim that the all-important holiday shopping quarter—Q4—would not hit analysts’ expectations.
Tuesday started off well for Dick’s Sporting Goods, as the company beat analyst expectations for the third quarter, with earnings per share of $0.48 on revenue of $1.81 billion, which is better than the $0.42 per share revenue of $1.77 billion that analysts polled by FactSet Research Systems Inc. (NYSE:FDS) projected. (Source: “Dick’s Sporting Goods Falls on Weak Guidance,” TheStreet, November 15, 2016.)
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DKS stock had been on a roll recently, with a 37% rise over the last six months. This is a result of a lot of their competitors bowing out of the game. The Sports Authority is liquidating, City Sports beat them there and has already liquidated, and Vestis Retail Group has filed for bankruptcy.
But Dick’s Sporting Goods does not expect its fourth quarter to deliver on projected earnings. DKS stock puts its earnings range at $1.19 and $1.31 per share, below FactSet’s $1.32 forecast for the period. Dick’s Sporting Goods is also downplaying sales, putting that in a range of three to six percent, as opposed to the Wall Street expectations of a 4.2% increase.
Which raises the question: has Dick’s Sporting Goods stock plateaued?
The increase in market share is to be expected as competition thins, but now that its most important quarter in 2016 is set to underperform, what does this mean for the future of Dick’s Sporting Goods and sports gear retailers in general? Obviously there’s still going to be purchasers of sporting goods as long as kids want to throw balls in hoops and nets and such, but there are a lot of games, tools and gadgets out there vying for our leisure time these days. (Source: “Dick’s Sporting Goods Looks Winded,” The Wall Street Journal, November 14, 2016.)
Not to mention that some other popular sports-related companies—GoPro Inc (NASDAQ:GPRO) and Fitbit Inc (NASDAQ:FIT)—are also facing turbulent times heading into the all-important fourth quarter.
With the market pointing the way it is, in terms of leisure goods, a savvy investor would do well to survey the demand for Dick’s Sporting Goods, sports-related companies in general, or even niche tech gear.
