Source: Wikimedia Commons

May 20 was not a good day to own shares of Dick's Sporting Goods (DKS -1.80%). Despite reporting earnings that surpassed analyst expectations, lower-than-anticipated sales and a dour forecast sent shares plummeting 18% to close at $43.60. With the company's stock trading at a 26% discount from its 52-week high, is now the best time to load up on the position for the long haul? Or should investors consider Cabela's (CAB) as an alternative prospect?

Dick's left investors stunned!
For the quarter, Dick's reported revenue of $1.44 billion. Despite coming in 8% above the $1.33 billion the company reported the same quarter a year earlier, it fell shy of the $1.46 billion investors wanted to see. In its earnings release, the company's management team attributed its lackluster results to poor performance in its golf and hunting categories.

Over the past year, Dick's saw its store count rise 8% from 603 locations to 650, but a modest 1.5% improvement in comparable store sales (compared to the 3% to 4% management expected) for the quarter ultimately prevented the business from achieving forecasts. The single biggest drag came from the company's Golf Galaxy operations, which saw comparable store sales fall 10.4% as the golf industry has taken longer to turn around than management thought likely.

Source: Wikimedia Commons

From a revenue perspective, Dick's may have disappointed its shareholders, but its earnings helped take the edge off the situation. For the quarter, the company reported earnings per share of $0.57. On top of coming in 10% above the $0.52 management reported during the first quarter of 2013, it handily beat the $0.52 Mr. Market wanted to see. In part, this earnings beat can be chalked up to the 2% reduction in share count the business enjoyed but it was also attributable to its selling, general, and administrative expenses falling from 23.5% of sales to 22.4%.

For the second quarter, management expects the business to do worse in comparison to last year's results. If they are accurate in their assessment, Dick's should report a modest 1% to 3% improvement in comparable-store sales and earnings per share in the range of $0.62 to $0.67. From a profitability stance, this is lower than the $0.71 the company saw in the second quarter last year.

How does Dick's stand up to Cabela's?
Over the past few years, Dick's has been a fascinating growth engine. Between 2009 and 2013, the retailer saw its revenue climb an impressive 41% from $4.4 billion to $6.2 billion while its net income soared 149% from $135.4 million to $337.6 million. According to the company's most recent annual report, the largest contributor to its sales growth over time appears to be a rise in store count.

During this five-year timeframe, Dick's increased its number of locations in operation by 26% from 510 to 642. However, it would be wrong to say that this has been the only driver of rising sales. Over the same period, the company reported an aggregate jump in comparable store sales of nearly 15%.

In addition to benefiting from higher sales, the business also enjoyed a reduction in costs stemming from its stronger market position. During the past five years, management reported that the company's cost of goods sold declined from 72.4% of sales to 68.7%.

DKS Revenue (Annual) Chart

DKS Revenue (Annual) data by YCharts

Over the same five years, rival Cabela's fared pretty well too. Between 2009 and 2013, the company's revenue rose 36.8% from $2.6 billion to $3.6 billion as comparable-store sales jumped 19.3% and store count increased 160% from 30 locations to 78.

This higher sales level also aided the company's net income, which rose 352% from $49.6 million to $224.4 million. Probably the two largest contributors to the disparity between the business's revenue growth and net income growth was its cost of goods sold falling from 60.9% of sales to 56.4% and its impairment charges dropping from $66.8 million to $5.9 million.

Foolish takeaway
Based on the data provided, it's understandable why Mr. Market punished Dick's. Despite seeing pretty strong earnings, the business fell short on revenue and is forecasting declining profits next quarter. However, the long-term performance of the company has been impeccable, as demonstrated by its rising sales and net income. For the Foolish investor who feels that the company's run is coming to an end, however, a better long-term pick might be Cabela's. Yes, the retailer did see its sales grow slower than Dick's has in the past, but its rise in profits could very well make up for it.