Dick's Sporting Goods (DKS)

Near Feb. 2025 lows. They keep refreshing their stores. Likes it. It should trade at a premium multiple.

Great managers, core business is humming, same-store sales is +6%. Foot Locker turned positive comps and guided higher. Expect a fine second-half 2026.

He added to it today. It's navigated inflation well. It's also cheap. It has a monopoly in sporting goods.

He added more after they reported a good quarter. They did have margin issues at Foot Locker, but this will sort itself out. Valuable is reasonable, not expensive, and has a moat. They continue to improve store format to entire customers. 

She bought more. It's 11% below highs. Their last numbers were really good with the core business humming, same-store sales +5% vs. 6.4% last year, and guided higher and increasing market share. One problem is Foot Locker, which is a disaster, but they took a charge and are right-sizing and improving inventory. They will turn around Foot Locker. It could take a while, but they will turn around.

Retail is loaded with landmines, but DKS can execute. He missed the recent dip as a buying opportunity.

It reports Tuesday. It's pulling ahead of peers in sporting goods. He expects strong numbers.

It's insane that shares dropped 10% this morning after they reported. They reported 4.5% same-store sales growth, beating, net sales also beat as well as EPS. Margins also expanded and raised their guidance. Shares fell because they raised guidance to where the street already was looking for, and their full-year forecast implies a slowdown in the back half of the year (2.5-3.5% same-store sales growth vs. the just-posted 4.5% growth). Also, the company has been investing in long-term growth and will double-down on that investment, but that will eat into earnings. He thinks that's great, but no some investors. This pullback is a buying opportunity. Among tailwinds is their app which boasts over 6 million users.

Is up 54% this year. Reported strong today. Top management have created amazing places to shop that attract Millennials and GenZers. They have a remarkable omni-channel business and have an incredible Game Changer app that lets you live-stream sports.

Is up 30% so far this year. They report Wednesday and he wouldn't be surprised if it was a good one.

DKS tends to grow in the low-single digit range but shares are trading at 11X forward earnings, so this lower growth is reflected in the valuation. What DKS has done really well is with share buybacks, not being a stranger to repurchase nearly 10% of shares in some years. Cash flows are strong and we tend to prefer companies with higher growth rates in general, but we don't have a whole lot to be critical of here. 
Unlock Premium - Try 5i Free

Is oversold. Expects a strong back to school season, since they move a lot of sporting equipment. They report this week.

He added more shares. The quarter was pretty good, and their new store format is killing it. They remain partners with Nike. This got oversold and cheap enough to buy. It's bouncing back fairly quickly.