Summary
- Overreaction to 2018 results leaves Dick's Sporting Goods shares at 11.0x P/E based on both the $3.25 EPS mid-point of management's forward 2019 guidance and TTM $3.24 2018 EPS.
- 2018 EPS increased 7.6% to $3.24 driven by the repurchase of 9.6 million shares which represented approximately 9.3% of Dick's Sporting Goods shares outstanding at the end of FY 2017.
- While net income has been flat in recent years, I have no problem investing in a no-growth company as long as I am not paying for growth in the valuation.
Dick's Sporting Goods (DKS) released Q4 and fiscal year 2018 results on March 12 which did not meet analyst estimates sending its shares plunging over 10%. However, the year was in no means terrible, in my opinion, and my investment thesis from previous articles on Dick's Sporting Goods remains intact. The company once again looks like a solid buying opportunity for value investors trading around 11.0x P/E based on both the $3.25 EPS mid-point of management's forward 2019 guidance and 2018's TTM $3.24 diluted EPS. After the 22% dividend increase, Dick's dividend yield is now around 3.1% and the company still has approximately $433M remaining under its authorization for share repurchases which can be used to return even more cash to shareholders.
Data by YCharts
