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What Should Investors Know About Dick’s Sporting Goods Inc’s (NYSE:DKS) Future?

After Dick’s Sporting Goods Inc’s (NYSE:DKS) recent earnings announcement in May 2018, it seems that analyst forecasts are fairly bearish, as a -3.0% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 2.2%. With trailing-twelve-month net income at current levels of US$325.3m, the consensus growth rate suggests that earnings will decline to US$315.6m by 2019. Below is a brief commentary around Dick’s Sporting Goods’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Dick’s Sporting Goods

Exciting times ahead?

The longer term expectations from the 25 analysts of DKS is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of DKS’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:DKS Future Profit August 29th 18
NYSE:DKS Future Profit August 29th 18

By 2021, DKS’s earnings should reach US$337.4m, from current levels of US$323.4m, resulting in an annual growth rate of 3.2%. EPS reaches $3.58 in the final year of forecast compared to the current $3.02 EPS today. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. However, the expansion of the current 3.8% margin is not expected to be sustained, as it begins to contract to 3.7% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Dick’s Sporting Goods, I’ve compiled three important factors you should further examine:

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  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is Dick’s Sporting Goods worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Dick’s Sporting Goods is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Dick’s Sporting Goods? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.