mrmarket
09-26-2003, 08:01 AM
$$$MR. MARKET$$$ Loves DKS
by: mr_market63 (43/M)
Long-Term Sentiment: Strong Buy 07/29/03 09:56 am
Msg: 1264 of 2649
Remember when you were in Junior High school and someone was acting up in a really weird way? What was your favorite expression? Did you ever say, “Stop being such a dick?”. Well actually today I decided I’m going to be a really big Dick. In fact, I really love Dicks…that’s Dick’s Sporting Goods. Today I bought DKS at 39.99. I will sell it in 4 to 6 weeks at 46.26. Here’s why I love DKS:
DKS stock is up 219% since its IPO last October. It has a 9 month r^2 coefficient of 85% and a 6 month coefficient of 92%. That’s some quality price momentum for you. Despite this growth, its P/E is only 20. Even though Dick’s P/E is higher than that of other retailers, its PEG is actually lower.
Other stats that justify its relative valuation are its ROE which is 26% vs. 20% of the industry. It also has an extremely low debt to equity ratio.
Now many of these retail stores are here today and gone tomorrow. The Dick’s store near my house, while almost as big as the Sports Authority, has a friendlier and higher class feel to it than does the Sports Authority. Similar to Lowes vs. Home Depot, Dicks has been able to steer customers away from its goliath competition.
Furthermore, the trend is the friend of DKS. As today’s fitness conscious teens become tomorrow’s consumers, DKS will continue to benefit and grow. As McDonald’s and Burger King growth peters out (pun intended), Dicks will pick up new customers.
Dick's earned 28 cents a share during the fiscal first quarter, which ended May 3. That was up 33% from the prior year and marked the third straight quarter of 31% or better profit growth. I think first quarter results were somewhat hampered by the bad weather. This bottled up pressure should uncork itself through the remainder of the year.
Dicks has 150 stores in 26 states which means that there is plenty of room for it to take its successful business model elsewhere and continue to grow (well at least until I sell my shares for my tidy profit). Revenues will increase through continued expansion. DKS opened 10 new stores during the first quarter and is expected to add 10 more by year-end.
Dick's is more efficient than its competion. It’s return on invested capital is 11.8% vs. a mean of 9.5% for Gart, Sports Authority, Big 5 Sporting Corp., Gaylan's Trading Co. and Hibbett Sporting Goods Inc.
Dicks’s is trying to grow its private label inventory from 7% to 15% of its sales. The reason being is the private labels have fatter margins. Even the boss thinks so: “We also were able to continue the growth of our gross margin rates,resulting in earnings in excess of our previous guidance," said Edward W. Stack, Chairman and CEO.
First Call expects earnings for the year to rise 12% to $1.97 a share, then gain 18% to $2.32 next year. $$$MR. MARKET$$$ believes that this year’s earnings will be $2.38/share with a great deal of this growth coming from the new store sales. Also helping will be that comparable sales are expected to increase approximately 2-3%. These earnings alone, at today’s valuation will propel the stock to a price of $47.60/share which is past my target sell price. In addition, Dicks’ has that “know your product” sex appeal that will enable it to carry a higher valuation than other retailers among the novice investment community. The company expects long term growth of 20%.
First Call has DKS rated as a buy/hold which means that if the August numbers are very good, some upgrades will be coming which should move the stock significantly.
The bottom line is that it’s time for the endomorphs to get off of the couch, throw on the running shoes and get back into shape. Now you can’t expect to get an amazing physique like $$$MR. MARKET$$$ overnight, but the effort will make you feel better about yourself.
I am HUGE!
$$$MR. MARKET$$$
by: mr_market63 (43/M)
Long-Term Sentiment: Strong Buy 07/29/03 09:56 am
Msg: 1264 of 2649
Remember when you were in Junior High school and someone was acting up in a really weird way? What was your favorite expression? Did you ever say, “Stop being such a dick?”. Well actually today I decided I’m going to be a really big Dick. In fact, I really love Dicks…that’s Dick’s Sporting Goods. Today I bought DKS at 39.99. I will sell it in 4 to 6 weeks at 46.26. Here’s why I love DKS:
DKS stock is up 219% since its IPO last October. It has a 9 month r^2 coefficient of 85% and a 6 month coefficient of 92%. That’s some quality price momentum for you. Despite this growth, its P/E is only 20. Even though Dick’s P/E is higher than that of other retailers, its PEG is actually lower.
Other stats that justify its relative valuation are its ROE which is 26% vs. 20% of the industry. It also has an extremely low debt to equity ratio.
Now many of these retail stores are here today and gone tomorrow. The Dick’s store near my house, while almost as big as the Sports Authority, has a friendlier and higher class feel to it than does the Sports Authority. Similar to Lowes vs. Home Depot, Dicks has been able to steer customers away from its goliath competition.
Furthermore, the trend is the friend of DKS. As today’s fitness conscious teens become tomorrow’s consumers, DKS will continue to benefit and grow. As McDonald’s and Burger King growth peters out (pun intended), Dicks will pick up new customers.
Dick's earned 28 cents a share during the fiscal first quarter, which ended May 3. That was up 33% from the prior year and marked the third straight quarter of 31% or better profit growth. I think first quarter results were somewhat hampered by the bad weather. This bottled up pressure should uncork itself through the remainder of the year.
Dicks has 150 stores in 26 states which means that there is plenty of room for it to take its successful business model elsewhere and continue to grow (well at least until I sell my shares for my tidy profit). Revenues will increase through continued expansion. DKS opened 10 new stores during the first quarter and is expected to add 10 more by year-end.
Dick's is more efficient than its competion. It’s return on invested capital is 11.8% vs. a mean of 9.5% for Gart, Sports Authority, Big 5 Sporting Corp., Gaylan's Trading Co. and Hibbett Sporting Goods Inc.
Dicks’s is trying to grow its private label inventory from 7% to 15% of its sales. The reason being is the private labels have fatter margins. Even the boss thinks so: “We also were able to continue the growth of our gross margin rates,resulting in earnings in excess of our previous guidance," said Edward W. Stack, Chairman and CEO.
First Call expects earnings for the year to rise 12% to $1.97 a share, then gain 18% to $2.32 next year. $$$MR. MARKET$$$ believes that this year’s earnings will be $2.38/share with a great deal of this growth coming from the new store sales. Also helping will be that comparable sales are expected to increase approximately 2-3%. These earnings alone, at today’s valuation will propel the stock to a price of $47.60/share which is past my target sell price. In addition, Dicks’ has that “know your product” sex appeal that will enable it to carry a higher valuation than other retailers among the novice investment community. The company expects long term growth of 20%.
First Call has DKS rated as a buy/hold which means that if the August numbers are very good, some upgrades will be coming which should move the stock significantly.
The bottom line is that it’s time for the endomorphs to get off of the couch, throw on the running shoes and get back into shape. Now you can’t expect to get an amazing physique like $$$MR. MARKET$$$ overnight, but the effort will make you feel better about yourself.
I am HUGE!
$$$MR. MARKET$$$