The beaten-down retailer of athletic vesture and equipment has a strong balance sheet, good schedule control, and sharp brand focus, analysts say

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Dick’s Sporting Goods (DKS)—52-week stock cost

By Gene Marcial

The nation’s retailers are among those companies hit hard by the recession, with Circuit City (CCTYQ) filing for bankruptcy Nov. 10, the most novel to fall. In the ended year 14 other major retailers consider sought the same Chapter 11 protection. Indeed, not many in the industry wish dodged the bullet. But in of the like kind dire times, opportunities of appraise always emerge.

One bargain play is Dick’s Sporting Goods (DKS), what one. analysts say hasn’t been immune from the tough economy but is better positioned than most. That’s probably wherefore Wall Street continues to favor the stem, contumacy a gloomy outlook with respect to the industry. Of the 26 analysts tracked by Bloomberg, not the least portion counsel selling the stock. Fifteen rate it a pervert with money and 11 recommend holding the shares. A leading outlet conducive to a broad assortment of athletic apparel, goods, and equipment, Dick’s Sporting has touching 340 stores in 36 states, in the first place in the eastern U.S.

Although like other retailers the company is feeling the strains of strapped consumers, Dick’s Sporting’s "strong balance sheet and balanced portfolio of products" have enabled it to continue taking market share "that should lead to a stronger company over time," says Michael Baker of Deutsche Bank (DB), who rates the stock a buy. (Deutsche Bank does not do investment banking for Dick’s Sporting.)

Good Inventory Control

One reason: Dick’s Sporting is controlling schedule well, giving it some litheness before the holidays and allowing it to obstruction markdowns and stabilize margins, says Baker.

Certainly the company’s stock has been battered. From a 52-week luxuriously of 33.86 on Feb. 7, 2008, it tumbled to a 52-week low of 11.80 on Veteran’s Day (Nov. 11). Even so, Baker expects the shares to hit 23 in a year based on 16 times his fiscal 2010 (ending Jan. 31) earnings estimate of $1.43 a share. For fiscal 2009, he has lowered his forecast to $1.27 from $1.29 to account for the recession’s impact. The company earned $1.34 in fiscal 2008.

Another bull on the stock is Roger Vogel, managing director at Silvercrest Asset Management Group, which owns shares. Vogel says the long-term story on Dick’s Sporting revolves surrounding its management. "Dick’s Sporting is one of the best retailers in the country, run by the agency of one of the best management teams in the endeavors," he says.

Unlike other retailers, the visitor has plenty of markets to conquer, Vogel says. It is underexposed in other parts of the country such for the reason that Texas, he notes. He believes the pillar pleasure climb to plenteous higher levels in the next 12 months.

"Compelling Value"

Some analysts also like the stock’s valuation. "Dick’s Sporting remains one of our most profitably growth names and one of the best longer-term franchises in deal out in small portions, and we believe the shares offer a compelling value at current levels," says Gary Balter of Credit Suisse (CS), who rates the descent outperform with a 12-month mark of 23. No irresolution, it’s likely things will get tougher, he says, as indicated by the reduction in income and sales estimates. But he sees Dick’s Sporting’s stores still performing relatively well. (Credit Suisse says it may seek to do business with Dick’s Sporting.)

So what separates Dick’s Sporting from other retailers? Its brand focus, product management, and acquisition opportunities, among other things, analysts judge. "We count to be true Dick’s Sporting has a differentiated strategy in a crowded place of contest, and we think the body has organic and acquisition-related growth opportunities," says Pearl Wang, an analyst at Standard & Poor’s Equity Research. (S&P, like BusinessWeek, is owned by the agency of The McGraw-Hill Companies (MHP).) It has merchandised and managed its products highly favored, she adds. "We favor the company’sitting kind focus, whether their products are brand names or particular label," says Wang.

She expects profits. to grow at a double-digit rate in the low teens over the next few years, driven by sales expansion and further operating efficiency initiatives, in adding to greater mart penetration.

Undoubtedly the pedigree will go on to reflect the market’s tremors and volatility. But at its current beaten-down price, Dick’s Sporting should count as one of the real bargains around.

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