Please ensure Javascript is enabled for purposes of website accessibility

Why Dick's Sporting Goods Stock Soared Today

By Joe Tenebruso – Aug 25, 2021 at 2:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors have a special dividend heading their way.

What happened

Shares of Dick's Sporting Goods (DKS -2.17%) surged on Wednesday after the retailer delivered excellent second-quarter results and increased its cash payout to shareholders. 

As of 2:30 p.m. EDT, Dick's stock price was up more than 14%. 

So what

Dick's net sales jumped 20.7% year over year to $3.27 billion, fueled by a 19.2% increase in same-store sales. Both figures were well above Wall Street's estimates, which had called for revenue of $2.84 billion and comp growth of 5.4%. 

A person is shopping in a sporting goods store.

Customers are returning to Dick's Sporting Goods' stores in droves. Image source: Getty Images.

Better still, Dick's is becoming more profitable as it expands its revenue base. The retailer's gross and operating margins improved to 39.9% and 20.3%, respectively, up from 34.5% and 14.4% in the year-ago period.. Dick's adjusted net income, in turn, soared 78% to $501.2 million, or $5.08 per share.

"Our record-breaking quarterly sales and earnings significantly exceeded our expectations, reflecting continued strong consumer demand across our diverse category portfolio," CEO Lauren Hobart said in a press release.

Now what

With its profits swelling, Dick's is ramping up its capital returns to investors. It boosted its quarterly dividend by 21% to $0.4375 per share and doubled its stock buyback program to a minimum of $400 million. Dick's also announced a $5.50 per share special dividend payable on Sep. 24 to stockholders of record on Sep. 10.

"This additional cash return to our shareholders demonstrates the confidence we have in our business, the strength of our balance sheet, and a commitment to efficiently deploy our cash," Hobart said.

Looking ahead, management sees Dick's full-year net sales and adjusted earnings per share growing by roughly 21% and 108%, respectively, in 2021.

"We continue to perform at a very high level and invest in our future to reimagine the athlete experience in our core business and with new concepts," executive chairman Ed Stack said. "I am very pleased with the strength of our business and confident about our growth opportunities."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dick's Sporting Goods Stock Quote
Dick's Sporting Goods
$119.26 (-2.17%) $-2.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.