Stock Analysis

What Is DICK'S Sporting Goods, Inc.'s (NYSE:DKS) Share Price Doing?

NYSE:DKS
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DICK'S Sporting Goods, Inc. (NYSE:DKS) saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on DICK'S Sporting Goods’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for DICK'S Sporting Goods

Is DICK'S Sporting Goods Still Cheap?

According to my valuation model, DICK'S Sporting Goods seems to be fairly priced at around 4.84% above my intrinsic value, which means if you buy DICK'S Sporting Goods today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $122.35, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since DICK'S Sporting Goods’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

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

earnings-and-revenue-growth
NYSE:DKS Earnings and Revenue Growth February 27th 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. However, with a negative profit growth of -0.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for DICK'S Sporting Goods. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? DKS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on DKS for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on DKS should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, DICK'S Sporting Goods has 2 warning signs (and 1 which is significant) we think you should know about.

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.

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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.