Kicking Around Dick's Sporting Goods

The news was largely known on Dick's Sporting Goods (DKS) following its January markup in its earnings guidance. The stock traded up nicely in the weeks after, and made today's earnings release a classic "sell the news" event (which is what is happening). However, does the market really know and appreciate the fundamental positives unfolding at Dick's? The combination of the below factors has me warming to a "buy on weakness" strategy.

Despite increased markdowns to clear through cold weather gear during an abnormally warm winter quarter, the company's gross margin expanded year over year. This suggests to me that there is pricing power in many other merchandise categories and good cost leverage (as seen in the fact that Dick's had a same-store sales decline in the quarter and considering e-commerce investments). Remember, the company's supplier base has pushed serious price increases onto the plates of the distributor base, so to see Dick's being able to hold its prices, and even pass them along to consumers with success, is music to my analytical ears....249 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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