Sporting-goods retailers are largely marked by positive metrics, such as same-store sales growth and increasing location counts. Retailers with these qualities tend to have improving earnings. Earnings-per-share gains ought to support stock-price increases. Lets take a look and see if these companies are favorable investments for the long term.

A growing store base
Dick's Sporting Goods (NYSE:DKS) operated 608 Dick's and Golf Galaxy locations as of early August. It plans to open 41 new stores during 2013, a 7% expansion rate.

Indeed, management is focused on increasing the store count and square footage. It sees the opportunity for about 1,100 units eventually. Its ability to add nearly 500 new stores is partly based on its planned extension into small markets within the U.S., a strategy embarked upon during this year.

Store-base growth should be the catalyst that drives improvements in Dick's earnings in the next three-to-five years. Along with this, Dick's is likely to gain further momentum from its offering of numerous popular brand names, as well as a marketing initiative that is supporting store traffic.

Dick's has no long-term debt and should have the flexibility to use cash for the capital expenditures required for store builds. An accelerated pace of store construction is not out of the question.

Dick's shares have sold off somewhat and are trading at a forward P/E ratio of about 16.0 times earnings. The stock offers decent long-term price gains at its current price.

Same-store sales gains
Big 5 Sporting Goods (NASDAQ:BGFV) operates a somewhat lower number of stores from its base in California; a 416 total as of June 30. It is also growing at a bit of a slower pace, with plans for 15 new locations this year. Still, the company is impressive for its comparable-store sales increases.

Same-store sales climbed 7.4% during the first half of 2013, including a 4.4% gain in the second quarter. The increases have stemmed from rising store traffic as well as higher sales from each of its key categories, including apparel, footwear and hard-goods.

The company is on pace for a strong earnings rebound this year. Along with sales gains, increases in its profit margins and gross margin ought to allow for EPS improvements.

Big 5 is a company with an improving income statement and a solid balance sheet. Its long-term debt-to-equity ratio is a moderate 0.3 compared with the industry average of 0.7. In other words, it is financially strong.

These shares could be rewarding over the long term. The stock is trading at a low P/E ratio of just 11.1 times forward earnings.

Sneaker store paying dividends
As of early August, Foot Locker (NYSE:FL) operated a whopping 3,495 stores in 23 countries. Modest same-store sales gains have been achieved through the first half of the company's fiscal year, allowing for an approximate 11% increase in EPS.

Another favorable aspect of Foot Locker is that it pays a quarterly dividend. Currently the stock yields 2.5% annually.

As opposed to growing the store count, Foot Locker is more focused on relocating and remodeling locations. In total, during fiscal 2012, it either relocated or remodeled 198 units, or about 6% of the base, and it continues to pursue this strategy during 2013.

Indeed, the company remodeled/relocated 89 stores during the first half of 2013. Its goal, to improve the profitability of the store base, appears to be a sound one. The company is on pace for a moderate earnings gain this year after growing sales and EPS nicely in 2012.

Foot Locker's stock is another that has fallen sharply over the past couple of months. Accordingly, this may be a buying opportunity. The forward P/E is 10.8 times earnings per share. Furthermore, it also offers a nice dividend.

All of these retailers of sporting equipment and clothing are worth a look as three- to-five year investments. That said, the best opportunity is probably the first discussed, Dick's Sporting Goods. This is in light of its growing store base and increasing comparable-store sales.



Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.