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Here's Why Dick's Sporting Goods Stock Is Going Up Today

By Jon Quast – Aug 26, 2020 at 12:27PM

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E-commerce sales were up almost 200%, and net income grew a whopping 146%.

What happened

Shares of Dick's Sporting Goods (DKS 2.28%) were going up on Wednesday after the company reported results for the second quarter of its fiscal 2021. The company beat analyst expectations on the top and bottom lines, and investors loved it. As of 12 p.m. EDT, the stock was trading 15% higher, touching new 52-week highs.

Perhaps just as important as a strong Q2, Dick's Sporting Goods' results for the upcoming third quarter are also looking good.

A hand plots an arrow higher on a graph.

Image source: Getty Images.

So what

In Q2, net sales increased 20% year over year to $2.7 billion for Dick's Sporting Goods. Brick-and-mortar stores weren't fully reopen until late June, but the physical stores saw a year-over-year increase in sales once they did. The star of the show, however, was e-commerce. E-commerce sales grew a whopping 194% in Q2.

Besides the benefit of higher sales, Dick's Sporting Goods' management had cut costs due to the uncertainty of the coronavirus. These factors combined to help deliver net income of $277 million, up 146% from last year. The company now finds itself in an enviable financial position with $1.1 billion in cash and cash equivalents and no borrowings on its line of credit. 

Now what

While Dick's Sporting Goods has still withdrawn its full-year 2020 guidance, it did provide a glimpse for how the upcoming Q3 is shaping up. Same-store sales measure sales only at stores open over 13 months. For the first three weeks of Q3, same-store sales have gone up 11%. That's not as much growth as Q2, but double-digit revenue growth is always welcome for this retail chain.

With improving operations and normalizing economic conditions, Dick's Sporting Goods has fully resumed returning capital to shareholders. It declared a dividend of $0.3125 per share, payable Sept. 25. And it said it'll be opportunistically repurchasing shares. It still has about $1 billion left on its current authorization plan.  

Jon Quast owns shares of Dick's Sporting Goods. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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