Dick's Sporting Goods (NYSE: DKS) continued to improve its batting average, reporting earnings per share that knocked Wall Street's expectations out of the park. But the next inning still has some investors worrying.

Dick's earnings increased 8% to $73.2 million, or $0.62 per share, compared to the $0.60 analysts were expecting. Net sales jumped 18% to $1.21 billion, and same-store sales managed a 2.7% boost. The results are a bit lumpy, though, since they include an extra week last year, as well as a $0.05-per-share boost from licensed merchandise related to the Super Bowl in the same quarter in 2006. Also, Q4 2007 included results from Dick's recent acquisition of Chick's Sporting Goods.

Acquisitions have been part of Dick's strategy, since the company snapped up both Chick's and Golf Galaxy in 2007. The Chick's purchase shows that Dick's knows how to make things difficult for rivals, creating additional pressure for Big 5 Sporting Goods (Nasdaq: BGFV) on the West Coast. Dick's may also know how to make things hard on suppliers sometimes; one former high roller, Heely's (Nasdaq: HLYS), recently lost Dick's as a customer, although that may stem from the shoes' loss of faddish appeal.

Dick's fourth-quarter results beat analysts' estimates by $0.02 per share, and exceeded Wall Street projections for revenue, too. However, the company's first-quarter guidance lagged the consensus estimate.

In its press release, the company cited coming initiatives, including opening new stores and launching private-brand strategies with Nike (NYSE: NKE), Adidas (OTC: ADDYY.PK), and Reebok, as well as its new brand Max Flight. But Dick's also said, "Even with all of these key initiatives we can't ignore the uncertain macro economic environment we are all currently facing." Dick's expects to report first-quarter earnings of $0.16 to $0.19 per share, down or flat from the first quarter last year. Comps, excluding Chick's, are expected to fall 1% to 4%.

Meanwhile, its balance sheet has some red flags. Not surprisingly, the company's cash hoard dropped 63% to $50.3 million. Furthermore, accounts receivable burgeoned by 56%, while inventory increased by 38%. (On a positive note, Dick's did generate $90.5 million in free cash flow in 2007.)

Despite management's cautious optimism about Dick's prospects in 2008, investors might want to proceed with caution. I'm not sure that sporting goods constitute "must-have" items during a consumer-driven recession, and given th all the near-term uncertainty, better opportunities to buy in might materialize.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.