Summary
- Dick's Sporting Goods sports higher margins than rivals.
- Catalysts are small and won't move the needle much.
- Headwinds appear to be overblown.
- Dick's is likely to be range bound for the foreseeable future.
- The best investment strategy for Dick's is conservative options.
Dick's Sporting Goods (DKS) is a leading sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear, and accessories. Dick's operates over 700 sporting goods stores across the U.S. catering to all levels of athletes as well as outdoor enthusiasts. Dick's relies heavily on trusted retail names such as Nike, Adidas, and more recently, Yeti.
Source: Dick's Sporting Goods
Stuck in the Mud
Those of us who own this stock are well aware that the stock price has been in a holding pattern for the past three years. That chart below clearly shows that the stock price has found a home between the $33 and $37 marks. In fact, in the last year alone, there were 7 instances of the stock dipping below $37, only to retrace back and touch or exceed that mark. Similarly, when the stock has dipped below $33 on multiple occasions, it has quickly reversed course. Without taking 1095 data shots, there is no way to get an exact number, but a visual check of the chart below shows the stock spending at least 75% of its time over the last three years between those two numbers.
A look at the second chart is also valuable from an investing perspective. That chart, showing a three-year snapshot of valuations, shows Dick's as being valued very consistently from a Forward PE perspective. In fact, Dick's has clearly spent over 90% of its time with a Forward PE between 10 and 12. The current valuation of 9.981 seems to indicate a very safe entry point.
