DICK'S Sporting Goods, Inc. (NYSE:DKS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 18% to US$98.40 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the latest upgrade, the 19 analysts covering DICK'S Sporting Goods provided consensus estimates of US$11b revenue in 2022, which would reflect a measurable 3.0% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to crater 30% to US$8.53 in the same period. Before this latest update, the analysts had been forecasting revenues of US$9.8b and earnings per share (EPS) of US$5.21 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for DICK'S Sporting Goods 22% to US$102 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic DICK'S Sporting Goods analyst has a price target of US$142 per share, while the most pessimistic values it at US$53.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.0% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 4.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. It's pretty clear that DICK'S Sporting Goods' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, DICK'S Sporting Goods could be worth investigating further.
Analysts are clearly in love with DICK'S Sporting Goods at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .
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