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Comps & Margin Growth to Aid DICK'S Sporting's (DKS) Q2 Earnings
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DICK’S Sporting Goods Inc. (DKS - Free Report) is expected to register year-over-year sales and earnings growth when it releases second-quarter fiscal 2023 results on Aug 22. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $3.2 billion, indicating growth of 3.4% from the year-ago quarter’s reported figure.
The consensus estimate for fiscal second-quarter earnings is pegged at $3.75, which suggests growth of 1.9% from the year-ago reported number. Also, the consensus mark has moved up by a penny in the past seven days.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.6%. It has a trailing four-quarter earnings surprise of 7.09%, on average.
DICK'S Sporting Goods, Inc. Price and EPS Surprise
DICK’S Sporting has been benefiting from strength in its businesses, strong operational execution and store expansion initiatives. Strong growth in demand for its key product categories, driven by differentiated assortments across footwear, athletic apparel and team sports, have been aiding its top-line performance. Healthy transaction growth and higher average ticket have been resulting in increased comparable store sales (comps).
Our model predicts comps for the second quarter of fiscal 2023 to increase 2.1%, whereas it reported a decline of 5.1% in the year-ago quarter.
The company’s compelling assortment and structural transformation initiatives have been beneficial in recent quarters.
On the last reported quarter’s earnings call, management noted that the gross margin rate improved from the fourth quarter of fiscal 2022, reflecting only a marginal year-over-year decline. Gross margin rates have been benefiting from reduced merchandise margin rates due to the normalization of pricing activity from the prior year. Additionally, lower supply-chain costs have been aiding the gross margin performance.
Consequently, management anticipated potential improvement in merchandise margin and lower supply-chain costs throughout fiscal 2023. It predicted gross and merchandise margins to improve sequentially throughout the fiscal year.
We expect the gross margin to expand 40 basis points (bps) year over year to 36.4% in the fiscal second quarter.
Gains from improved gross and merchandise margins, as well as lower supply-chain costs, are expected to get reflected in the company’s robust bottom-line performance for the fiscal second quarter.
The company has been on track with its store initiatives. As part of its store growth strategies, DKS has been innovating to provide an omni-channel athlete experience to consumers. It has also been enhancing and refining its highly engaging in-store service model to consistently support and inspire its athlete customers. Additionally, the launch of new store formats and store expansion have been a priority to grab market share. Gains from the store initiatives are expected to have bolstered the performance in the to-be-reported quarter.
However, escalating operating costs and expenses amid a high inflationary environment have been concerning. The company has been witnessing higher SG&A rates, driven by investments in its hourly wage rates, talent and technology, to support its growth strategies. The continuation of higher SG&A expenses is likely to have partly marred the bottom line in the to-be-reported quarter.
As a percentage of sales, we expect SG&A expenses to increase 120 basis points to 22.3% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 8.7% year over year to $714.3 million. This is anticipated to have offset growth in the gross margin in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for DICK'S Sporting this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DICK’S Sporting currently has a Zacks Rank #3 and an Earnings ESP of +1.13%.
Other Stocks With Favorable Combination
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in the upcoming releases:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.33% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.5 million, which suggests growth of 13.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +11.07% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 1.3% from the figure reported in the prior-year quarter.
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.5 billion, which suggests 9% growth from the figure reported in the prior-year quarter.
The consensus mark for ULTA’s quarterly earnings has moved up 0.5% in the past seven days to $5.84 per share. The consensus estimate suggests growth of 2.5% from the year-ago quarter.
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Comps & Margin Growth to Aid DICK'S Sporting's (DKS) Q2 Earnings
DICK’S Sporting Goods Inc. (DKS - Free Report) is expected to register year-over-year sales and earnings growth when it releases second-quarter fiscal 2023 results on Aug 22. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $3.2 billion, indicating growth of 3.4% from the year-ago quarter’s reported figure.
The consensus estimate for fiscal second-quarter earnings is pegged at $3.75, which suggests growth of 1.9% from the year-ago reported number. Also, the consensus mark has moved up by a penny in the past seven days.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.6%. It has a trailing four-quarter earnings surprise of 7.09%, on average.
DICK'S Sporting Goods, Inc. Price and EPS Surprise
DICK'S Sporting Goods, Inc. price-eps-surprise | DICK'S Sporting Goods, Inc. Quote
Factors to Note
DICK’S Sporting has been benefiting from strength in its businesses, strong operational execution and store expansion initiatives. Strong growth in demand for its key product categories, driven by differentiated assortments across footwear, athletic apparel and team sports, have been aiding its top-line performance. Healthy transaction growth and higher average ticket have been resulting in increased comparable store sales (comps).
Our model predicts comps for the second quarter of fiscal 2023 to increase 2.1%, whereas it reported a decline of 5.1% in the year-ago quarter.
The company’s compelling assortment and structural transformation initiatives have been beneficial in recent quarters.
On the last reported quarter’s earnings call, management noted that the gross margin rate improved from the fourth quarter of fiscal 2022, reflecting only a marginal year-over-year decline. Gross margin rates have been benefiting from reduced merchandise margin rates due to the normalization of pricing activity from the prior year. Additionally, lower supply-chain costs have been aiding the gross margin performance.
Consequently, management anticipated potential improvement in merchandise margin and lower supply-chain costs throughout fiscal 2023. It predicted gross and merchandise margins to improve sequentially throughout the fiscal year.
We expect the gross margin to expand 40 basis points (bps) year over year to 36.4% in the fiscal second quarter.
Gains from improved gross and merchandise margins, as well as lower supply-chain costs, are expected to get reflected in the company’s robust bottom-line performance for the fiscal second quarter.
The company has been on track with its store initiatives. As part of its store growth strategies, DKS has been innovating to provide an omni-channel athlete experience to consumers. It has also been enhancing and refining its highly engaging in-store service model to consistently support and inspire its athlete customers. Additionally, the launch of new store formats and store expansion have been a priority to grab market share. Gains from the store initiatives are expected to have bolstered the performance in the to-be-reported quarter.
However, escalating operating costs and expenses amid a high inflationary environment have been concerning. The company has been witnessing higher SG&A rates, driven by investments in its hourly wage rates, talent and technology, to support its growth strategies. The continuation of higher SG&A expenses is likely to have partly marred the bottom line in the to-be-reported quarter.
As a percentage of sales, we expect SG&A expenses to increase 120 basis points to 22.3% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 8.7% year over year to $714.3 million. This is anticipated to have offset growth in the gross margin in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for DICK'S Sporting this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DICK’S Sporting currently has a Zacks Rank #3 and an Earnings ESP of +1.13%.
Other Stocks With Favorable Combination
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in the upcoming releases:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.33% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.5 million, which suggests growth of 13.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +11.07% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests significant growth of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 1.3% from the figure reported in the prior-year quarter.
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.5 billion, which suggests 9% growth from the figure reported in the prior-year quarter.
The consensus mark for ULTA’s quarterly earnings has moved up 0.5% in the past seven days to $5.84 per share. The consensus estimate suggests growth of 2.5% from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.