Stock Analysis

Is DICK'S Sporting Goods, Inc. (NYSE:DKS) Potentially Undervalued?

NYSE:DKS
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DICK'S Sporting Goods, Inc. (NYSE:DKS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$148 at one point, and dropping to the lows of US$111. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether DICK'S Sporting Goods' current trading price of US$111 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at DICK'S Sporting Goods’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for DICK'S Sporting Goods

What's The Opportunity In DICK'S Sporting Goods?

Good news, investors! DICK'S Sporting Goods is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $176.24, but it is currently trading at US$111 on the share market, meaning that there is still an opportunity to buy now. However, given that DICK'S Sporting Goods’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will DICK'S Sporting Goods generate?

earnings-and-revenue-growth
NYSE:DKS Earnings and Revenue Growth September 8th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of DICK'S Sporting Goods, it is expected to deliver a relatively unexciting earnings growth of 4.6%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since DKS is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on DKS for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DKS. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 1 warning sign for DICK'S Sporting Goods and you'll want to know about this.

If you are no longer interested in DICK'S Sporting Goods, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether DICK'S Sporting Goods is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.