DICK'S Sporting Goods shares fell by -5.4% during the day's afternoon session, and are now trading at a price of $203.15. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
a Very Low P/E Ratio but Its Shares Are Expensive:
DICK'S Sporting Goods, Inc., together with its subsidiaries, operates as an omni-channel sporting goods retailer primarily in the United States. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.06 and an average price to book (P/B) ratio of 3.18. In contrast, DICK'S Sporting Goods has a trailing 12 month P/E ratio of 16.8 and a P/B ratio of 6.09.
DICK'S Sporting Goods's PEG ratio is 2.37, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues but Similar Gross Margins to the Industry Average of 32.35%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $8,437 | $8,751 | $9,584 | $12,293 | $12,368 | $12,984 |
| Gross Margins | 28% | 28% | 32% | 38% | 35% | 35% |
| Net Margins | 4% | 3% | 6% | 12% | 8% | 8% |
| Net Income (M) | $320 | $297 | $530 | $1,520 | $1,043 | $1,047 |
| Net Interest Expense (M) | $10 | $17 | $49 | $58 | $95 | $58 |
| Depreciation & Amort. (M) | $244 | $270 | $326 | n/a | $365 | $394 |
| Diluted Shares (M) | 87 | 97 | 11 | 97 | 84 | 83 |
| Earnings Per Share | $3.24 | $3.34 | $5.72 | $13.87 | $10.78 | $12.18 |
| EPS Growth | n/a | 3.09% | 71.26% | 142.48% | -22.28% | 12.99% |
| Avg. Price | $29.0 | $32.81 | $39.7 | $93.49 | $95.81 | $204.15 |
| P/E Ratio | 8.87 | 9.65 | 6.31 | 5.12 | 7.13 | 16.05 |
| Free Cash Flow (M) | $515 | $187 | $1,329 | $1,309 | $558 | $940 |
| CAPEX (M) | $198 | $217 | $224 | $308 | $364 | $587 |
| Current Ratio | 1.38 | 1.4 | 1.52 | 1.81 | 1.65 | 1.71 |
DICK'S Sporting Goods has growing revenues and increasing reinvestment in the business and exceptional EPS growth. Additionally, the company's financial statements display generally positive cash flows and a decent current ratio of 1.71. Furthermore, DICK'S Sporting Goods has similar gross margins to its peers.
