DICK'S Sporting Goods Inc. DKS is currently trading at a discount to its historical and industry benchmarks. The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 12.66X, below its median level of 14.73X in the past year and significantly lower than the industry’s average of 15.01X. This suggests that DKS may be undervalued relative to its earnings potential, presenting an attractive opportunity for investors. The company's current Value Score of A further highlights its potential for long-term growth.
DKS P/E Ratio (Forward 12 Months)
Zacks Investment Research
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Let us analyze the fundamentals of DICK’S to understand the key drivers behind its market position and financial resilience.
Decoding DKS’ Strategies
DICK'S continues to deliver strong performance by staying focused on its core strategic initiatives, which revolve around four key pillars: delivering an omnichannel athlete experience, offering a differentiated product assortment, deepening engagement with the DICK’S brand and empowering knowledgeable, passionate teammates to provide exceptional service.
These strategies have driven meaningful progress, reflected by the company’s strong brand equity and continued market share gains. In the fourth quarter of fiscal 2024, DICK’S delivered solid top-line growth, supported by robust comparable store sales and healthy transaction growth. Net sales improved year over year, surpassing market expectations, while consolidated comparable sales were fueled by increased transaction volumes and higher average customer spending.
DICK’S commitment to customer centricity is evident through bold strides in its digital transformation, with GameChanger and the Dick’s Media Network as two long-term revenue drivers. In fiscal 2024, GameChanger engaged approximately 9 million unique users, with nearly 1.8 million average daily active users in the fiscal fourth quarter alone. This platform extends the brand’s reach beyond the traditional retail model, enabling deeper connections with athletes and reinforcing DICK’S leadership position in sports.
Meanwhile, the Dick’s Media Network, the company’s new retail media platform, leverages its rapidly expanding Scorecard loyalty program and rich database recognized as one of the most robust in youth sports. Although still in the early stages, the media network has attracted strong initial interest from partners. Management anticipates this platform to fuel long-term sales growth and enhance margin performance as it scales.
DICK’S is accelerating its store expansion to elevate the omnichannel athlete experience. The company continues to grow its House of Sport and Field House concepts, both of which have shown strong sales performance and are central to its evolving retail strategy. It is also expanding its Golf Galaxy business with new performance center locations. Key markets, like Texas, are receiving focused investments in stores, marketing and infrastructure, including a new distribution center to support future growth and strengthen service across channels.
DKS’ Stock Price Performance
Despite trading at a discounted forward P/E multiple, DICK’S stock has faced notable pressure in recent months. Shares of the sporting goods retailer have fallen 19.8% in the past three months compared with the Zacks Retail - Miscellaneous industry’s 17.8% decline. Furthermore, the company has underperformed the broader Retail - Wholesale sector and the S&P 500 index’s declines of 9.1% and 10.4%, respectively, in the same period.
DKS Price Performance Vs Industry, S&P 500 & Sector
Zacks Investment Research
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The technical indicators also reveal that the stock is currently trading below both its 50-day and 200-day moving averages, signaling weak momentum and a lack of investor confidence in the company’s performance. Given these factors, investors are left wondering how to approach DKS stock.
DKS Trades Below SMA
Zacks Investment Research
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What May Pull Back DKS’ Stock Momentum?
The sharp drop in DKS stock reflects rising concerns in the athletic retail space, which remains sensitive to shifts in consumer spending and broader economic pressures. The recent tariffs are adding to the uncertainty, potentially forcing DICK’S to choose between raising prices or absorbing lower margins, both of which could negatively impact the business. Although tariffs are paid by importers, the added costs often get passed along to consumers, pressuring demand.
At the same time, DICK’S has been witnessing an uncertain macroeconomic environment marked by higher wage rates and increased investments in talent, technology and marketing to enhance the athlete experience. These strategic initiatives have elevated costs, with adjusted SG&A expenses rising 7.8% year over year in the fourth quarter of fiscal 2024, leading to a deleverage of 101 basis points. Management expects further SG&A deleverage in the first half of fiscal 2025, with some relief anticipated in the second half as investments begin to yield benefits.
Despite a strong fourth-quarter fiscal 2024, DKS issued a soft comparable sales (comps) view for fiscal 2025. The company expects comps growth of 1-3%, down from 5.2% delivered in fiscal 2024. The midpoint of the comps view represents almost a 10% three-year comp stack. DKS envisions earnings to be $13.80-$14.40 per share compared with adjusted earnings of $14.05 per share in fiscal 2024. DICK'S envisions EPS to drop year over year in the first half while increasing in the second half.
How to Play DKS Stock?
DICK’S has shown resilience, supported by its strategic initiatives and solid brand strength. The stock’s undervaluation relative to the industry, combined with its long-term growth potential, offers reasons for optimism. However, the company’s recent stock decline triggered by new tariffs, rising wage pressures and continued investments in talent, technology and marketing combined with softer sales and EPS guidance continues to weigh on near-term profitability.
While its attractive valuation presents an appealing opportunity, a difficult consumer environment remains a concern. All said, the current stakeholders should maintain their position in the stock. Currently, DICK’S carries a Zacks Rank #3 (Hold).
Key Picks
We have highlighted three better-ranked stocks in the broader sector, namely Nordstrom, Inc. JWN, The Gap, Inc. GAP and Urban Outfitters Inc. URBN.
Nordstrom, a fashion retailer that provides apparel, shoes, beauty, accessories and home goods for women, men, young adults and children, currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales indicates growth of 2.2% from the year-ago period’s reported figures. JWN delivered an earnings surprise of 22.2% in the last reported quarter.
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 at present.
The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2025 earnings and sales indicates growth of 14.5% and 6.6%, respectively, from the fiscal 2024 reported levels. URBN delivered a trailing four-quarter average earnings surprise of 28.4%.
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