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Dick's Sporting Goods: Sporting profits


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by Nicholas Vardy, editor Bull Market Alert

In 1948, 18-year-old Dick Stack was a salesman at a small Army and Navy store. With $300 from his grandmother, he opened a bait and tackle shop. Today Dick's Sporting Goods (DKS) is the largest publicly-traded sporting goods chain in the US.

The Pittsburgh-based firm operates a total of 561 Dick's Sporting Goods and Golf Galaxy stores. Dick's current Chief Executive Edward Stack expects the company to continue its steady expansion as Americans adopt healthier lifestyles, including increased exercise.

Six new Dick's Sporting Goods stores are opening this quarter. The same number opened in the fourth quarter. That expansion would bring the total to 486 Dick's Sporting Goods stores nationwide, as well as 81 Golf Galaxy shops.

Dick's recent earnings have belied the signs of any economic slowdown. Earnings per share climbed to 88 cents a share, 16% higher vs. the same quarter a year ago.

Revenue rose 6% in the quarter to $1.6 billion. Dick's also issued its first dividend ever in the fourth quarter, and announced a 12-month share repurchase program.

Management forecasts continued strong growth in 2012, expecting first-quarter EPS of 36-38 cents, a 23% hike from the 30-cent-a-share profit it posted a year earlier, and a penny above analysts' consensus. So buy DKS at market, and place your stop at $42.00.

Learn more about this financial newsletter at Nicholas Vardy's Bull Market Alert.


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