Dick's Is a Sport

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Shares of growing sporting goods retailer Dick's (NYSE: DKS) fell in trading today, perhaps because fiscal Q4 (ended Jan. 31) earnings only matched Wall Street's consensus estimate -- but no matter, as the company reported solid growth numbers. Q4 net income rose 36% to $26 million on a 20% jump in revenue, and same-store sales improved 4.6% year over year.

Sales and operating margins were above plan, management said, and the company finished the year having displayed evidence of solid inventory management and strong merchandising. A glance at the cash flow statement reveals cash from operations that came in well ahead of net income for the year, as well as free cash flow that, at about $32 million, was about flat with year-ago levels, even as capital expenditures more than doubled.

Looking ahead, Dick's is pointing investors toward current-year net income growth of approximately 25%. While impressive, this figure is seen below the 2003 growth number, and same-store sales growth is also expected to slow to about 3%. These are, perhaps, factors behind the shares' slight slump this morning.

Dick's continues to be one of the hot stocks in a sector that also includes Sports Authority (NYSE: TSA), Big 5 (Nasdaq: BGFV), Sport Chalet (Nasdaq: SPCH), and Galyans (Nasdaq: GLYN). All but the latter have outperformed the S&P 500 over the last 12 months, and all by very respectable margins.

Market watchers have enjoyed slamming the sporting goods sector in recent years, particularly as acquisitive leader Sports Authority has turned in slim net margins and nonexistent free cash flow even as discounters such as Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) have muscled in on the business.

But investors have long been behind the sector, as Sports Authority's 10-year chart indicates. Given such an environment, that a company like Dick's -- well-regarded for its service and product mix -- would be able to grow quickly into a credible national player is perhaps unsurprising.

Talk about the long-term strength of the sporting goods business on our Dick's Sporting Goods discussion board.

Fool contributor Dave Marino-Nachison doesn't own shares of any of the companies in this story. He can be reached via email.