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The Ratings Game: Dick’s Sporting Goods’ updated outlook suggests sales jumped after Christmas

Christmas came late for Dick’s Sporting Goods Inc., according to Wedbush analysts, who say the athletic retailer’s updated outlook suggests that sales bounced after the big holiday.

Dick’s DKS, -1.22% said in a filing that it now expects full-year earnings per share of $13.70 to 13.79, up from previous guidance for $12.88 to 13.06. Adjusted EPS is expected to be $15.50 to 15.60 compared with previous guidance for $14.60 to 14.80.

The FactSet consensus is for EPS of $15.35.

The outlook for full-year same-store sales is for growth between 25.8% to 26.1%, up from previous guidance for an increase between 24% to 25%. The FactSet consensus is for 25.8% growth.

Fourth-quarter EPS is expected to be $3.00 to 3.09 and the outlook for adjusted EPS is $3.45 to 3.55. The FactSet consensus is for $3.33.

Fourth-quarter same-store sales are expected to increase between 3.7% to 4.7%, compared with a FactSet consensus for 3.8% growth.

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“Despite the likelihood of a slowdown in sales growth in December due to Omicron fears and that consumers had likely completed more holiday shopping early due to widespread news reports of supply chain disruptions that could lead to out-of-stocks, we believe sales bounced back after Christmas,” wrote analysts, led by Seth Basham.

“With continued strong excess cash flow, we believe Dick’s will continue to aggressively repurchase shares and is considering ‘cleaning up’ its balance sheet (namely the convertible bonds and warrants at the outset of COVID).”

Wedbush rates Dick’s stock outperform with a $140 price target.

“On the margin front, we sense that with the better 4Q sales (and considering the company flagged fewer promotions YoY as of 11/23), better merch margins in particular were a driver of the beat,” wrote Wells Fargo in a note.

“All in, with 4Q expectations having come in on Dick’s in recent weeks, particularly around concerns of a holiday demand pull-forward in October/November negatively impacting December, the better 4Q outlook was a positive surprise […] and among the better updates across the group this holiday season.”

Still, analysts say questions linger about 2022.

Wells Fargo rates Dick’s stock equal weight with a $128 price target, down from $140.

Read: Bed Bath & Beyond says even its printed flyers fell victim to supply chain disruptions and labor shortages

Truist Securities sees lots of long-term tailwinds, including enthusiasm for outdoor activities, the retailer’s relationship with Nike Inc. NKE, -1.62% and e-commerce improvement . Analysts maintained their buy stock rating and raised the price target to $168 from $161.

Dick’s stock has soared 73.6% over the past year while the S&P 500 index SPX, -0.57% has gained 23.4% for the period.

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