PMMAF

Dick’s Sporting Goods to Acquire Foot Locker

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Image: Dick’s Sporting Goods’ shares sold off on its announcement that it would acquire Foot Locker. By Brian Nelson, CFA On May 15, Dick’s Sporting Goods (DKS) announced that it would acquire Foot Locker (FL) in a transaction that implies an equity value of $2.4 billion and enterprise value of $2.5 billion. Foot Locker shareholders can elect to receive either $24.00 in cash or 0.1168 shares of Dick’s Sporting Goods common stock for each share of Foot Locker stock they own. Dick’s intends to finance the acquisition through a combination of cash on hand and new debt and is expected to close in the second half of 2025. Dick’s intends to operate Foot Locker as a standalone business unit within … Read more

Dick’s Sporting Goods Soars, Raises Dividend 10%

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Image: Dick’s Sporting Goods’ shares have soared since the doldrums of the COVID-19 meltdown. By Brian Nelson, CFA On March 14, Dividend Growth Newsletter portfolio holding Dick’s Sporting Goods (DKS) reported better-than-expected top and bottom-line performance for the fourth quarter and issued a solid outlook for fiscal 2024. Shares of Dick’s Sporting Goods have done fantastic since the worst of the COVID-19 meltdown years ago, and the momentum behind its business remains strong, as evidenced by a nice 10% increase in its quarterly dividend. We expect to raise our fair value estimate of Dick’s Sporting Goods upon our next valuation model update, and the company remains a key idea in the Dividend Growth Newsletter portfolio. Management’s commentary in the quarterly … Read more

Dick’s Sporting Goods Still Looks Really Cheap

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Image Source: Dick’s Sporting Goods By Brian Nelson, CFA On November 21, Dick’s Sporting Goods (DKS) reported solid third-quarter results with sales up 2.8% on a year-over-year basis thanks to comparable store sales growth of 1.7% that lapped an impressive 6.5% increase in the same period a year ago. Non-GAAP earnings per share came in at $2.85 in the quarter, up from $2.60 in last year’s period. The company also raised its 2023 comparable store sales growth guidance range to 0.5%-2% from flat to 2% previously, and it raised its 2023 non-GAAP earnings per share outlook to $12.00-$12.60 from its previous range of $11.50-$12.30. We liked the news and continue to believe that shares of Dick’s Sporting Goods are mispriced. … Read more

Ferrari’s Results Speak to Resilience in Ultra-Luxury Markets

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Image: Ferrari raised its guidance for 2023.  By Brian Nelson, CFA On November 2, sports car maker Ferrari N.V. (RACE) reported excellent third-quarter results that showed net revenues advancing 23.5% on a year-over-year basis, with total shipments up 8.5% from the same period a year ago. Adjusted earnings before interest and taxes (EBIT) advanced 41.6% from last year’s period, as the firm hauled in industrial free cash flow of €301 million in the quarter. Net industrial debt stood at €233 million at the end of September. As shown in the image above, management raised its year-end guidance thanks in part to a strong product mix and improved revenue from racing activities, and the firm noted that its “order book remains … Read more

Dick’s Sporting Goods Down ~7% Year-to-Date; Sticking with It Long Term

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Image Source: Mike Mozart By Brian Nelson, CFA Dividend growth investing continues to face pressure during 2023 as investors have migrated to entities with strong net cash positions, solid free cash flow generation and secular growth prospects, many ideas of which can be found in the areas of big cap tech (XLK) and large cap growth (SCHG). The SPDR S&P Dividend ETF (SDY), which includes high-yielding Dividend Aristocrats, is down more than 4% so far in 2023 on a price-only basis and is off more than 6% over the past year, also on a price-only basis. With interest rates on the rise, the tradeoff between owning a certificate of deposit at the local bank yielding north of 5% and dividend … Read more

Dick’s Sporting Goods Trades at Less Than 10x Expected Fiscal 2023 Earnings; We Like Shares

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Image Source: Dick’s Sporting Goods By Brian Nelson, CFA When it comes to retail exposure, Dick’s Sporting Goods (DKS) is one of our top considerations. The company reported strong first-quarter fiscal 2023 results for the period ending April 29, 2023, that showed 3.4% same-store-sales growth and a 19% advance in non-GAAP earnings per diluted share. For fiscal 2023, management is targeting positive same-store sales expansion and earnings per diluted share in the range of $12.90-$13.80, implying that shares are trading at less than 10x expected fiscal 2023 earnings. The company has considerable long-term operating lease liabilities, but it has a net cash position. Dick’s Sporting Goods raised its dividend considerably recently, and we continue to like shares in the Dividend … Read more

Lululemon Athletica Buys MIRROR

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Image Source: Lululemon Athletica Inc – First Quarter Fiscal 2020 Quarterly Financial Supplements By Callum Turcan On June 29, Lululemon Athletica Inc (LULU) announced it was acquiring home fitness company MIRROR for $500 million in cash. MIRROR sells ~$1,500 (before taxes and installation fees) screens that come with a camera and speaker system that allow users to participate in at-home workouts assisted by trainers/videos. That offering comes with a $39 per month digital subscription which allows the user (or users, up to six people per household) to access on-demand and live workout sessions, and additionally, personal training sessions cost up to $40 each. Overview Lululemon first invested in MIRROR back in mid-2019 and will run the firm as a standalone … Read more

Nike Doubles Down on Its Digital Strategy

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Image Shown: Shares of Nike sold off moderately on June 26 after reporting its full-year earnings for fiscal 2020 (period ended May 31, 2020), though please note shares of NKE have rebounded sharply from their March 2020 lows. Over the past year shares of Nike are still up ~15% as of this writing, outpacing the 4% gain seen at the S&P 500 (SPY) before taking dividend considerations into account. By Callum Turcan Retailers of consumer discretionary products that invested heavily in their digital presence and direct-to-consumer sales/distribution systems before the coronavirus (‘COVID-19’) pandemic put themselves in a much better position to ride out the storm. Nike Inc (NKE) reported that its digital sales in the fourth quarter of fiscal 2020 … Read more

Lululemon Supported by Strong Digital Sales

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Image Source: Lululemon Athletica Inc – Third Quarter Fiscal 2019 Earnings Infographic By Callum Turcan On June 11, Lululemon Athletica Inc (LULU) reported first quarter fiscal 2020 earnings (period ended May 3, 2020) that missed consensus top- and bottom-line estimates. The company’s strong digital sales were offset by the negative impact of containment efforts to stop the spread of coronavirus (‘COVID-19’), namely store closures (both company-owned and third-party retail locations). Shares of LULU are still up comfortably year-to-date as of this writing, in large part due to its pristine balance sheet and past investments in its digital infrastructure and digital sales channels. We covered these two aspects of its business model and why that would be a source of strength … Read more

Under Armour Potentially Faces a Serious Liquidity Crunch

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Image Shown: Under Armour Inc may face a serious liquidity crunch if its creditors don’t extend the maturity length of the borrowings under its revolving credit facility. By Callum Turcan On May 11, Under Armour Inc (UA) reported earnings for the first quarter of 2020 with its GAAP revenues declining by 23% year-over-year, and management attributed ~1500 basis points of that decline to the ongoing coronavirus (‘COVID-19’) pandemic. On the flip side, Under Armour’s GAAP gross margins improved by ~110 basis points year-over-year due to reduced pricing discounts, though COVID-19 weighed against the company’s performance in this area as well. Under Armour reported a GAAP net loss of $590 million in the first quarter of 2020 due to rising operating … Read more