Company Analysis-DKS- Dicks Sporting Goods.
Here is a great Company, Dicks Sporting Goods. With only 9 Billion Market Cap this thing is selling at a Big discount to Intrinsic Value. 2022 Net Income of 1.5 Billion in 2021 it is Trading at only 6 Times 2021 earnings. This company also looks out for the shareholders, Last year the Purchased 1.1 Billion dollars worth of shares and paid 600 Million in Dividends. Have the best Margins in the business. In 2021 38.33 Gross Margin, 16.55% Operating Margin. In retailing this are huge numbers. Financially the company is in great shape with 2.6 Billion in cash.
Dicks also has great Fucking Managers, Ed Stack the Son of Dick Stack has turned this family business from a store operation to over 850 stores around the country. Ed Stack Fucks the competition for breakfast. Many sports retailers have gone under When the Giant Dicks comes to town. They are used to being the small underdogs but over the last decade they have become the biggest and best sports retailer in the country. There’s really 2 competitors left. 1 being Big 5, I’m not sure if you’ve ever been to Big 5 but we had one in my small town and it was horrible. Always more workers than costumers and never had what you wanted. THEY ARE FUCKED.
The other competitor is ASO Academy sports and Outdoors, they are a solid competitor (Inside the state of Texas). Outside of Texas they haven’t been able to expand the brand very well. While Dicks has been able to expand in the state. So, the biggest and best retailer in the country has 1 competitor in 1 state. They have also made great strides in their online business, and have a great omnichannel.
Looking at Big 5’s Margins last year, they were around 11.6% at operating income, while ASO was at 12.7%. With DKS margins at 16.55% this is a huge competitive advantage. Able to profit 4-5 extra dollars for every 100$ of revenue.
DKS is also much more conservatively financed which puts them much better to handle adverse situations such as inflation,etc. For example DKS has 2.6 Billion in Cash and 2.7 Billion in current assets. Big 5 has 97 million in cash and 270 million in current assets. ASO had 486 million in cash and over 1.1 Billion in current assets. This puts Big 5 and ASO in a much more leveraged situation, where a couple bad quarters or years would really put pressure on them to either issue more shares or more debt in order to pay the bills. Dicks is a much Bigger and stronger company than their rivals.
Dicks has also landed a major partnership with Nike to get some exclusivity on some of their products. The only negative of this company is that the sports retailing business is going to have lower revenue and profits this year. The retailing business was helped hugely by stimmy checks in 2021. However with Net income of 300 Million in 2019 and going to be around 1 Billion this year, this is still very good net income growth. The 10 years prior to 2021 their average net income increase was 19% a year on average and even if you look at 2019 and its average net income growth for 10 years it was solid with over 8%. That is still a solid growth rate for a company selling so cheap and that buys back a lot of stock. This is a company that is getting bigger and still growing at a good rate. Big 5 and ASO need to be beware: Dicks in the rearview mirror might be bigger than they appear. Dicks is coming for their ass.
At the end of the first quarter then company had 77 Million shares outstanding. Ed Stack owns 20 Million of the shares. This is a family business he’s worked his entire life at. He ain’t FUCKING selling like Pussyboy RC I’ll tell you that. Then looking at the rest of the insiders they own another 11 Million shares. Most of them aren’t selling those either. So now were looking at a company with 44 million shares outstanding. Then if you count the 4 biggest institutional investors they own another 24 Million shares. If you count all those you’re looking at 20 Million of float, while the company buy’s back a lot of shares.
In conclusion This is a great company at a great price that has the chance to go to the fucking moon. Already up 50% since June.
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