Hibbett Stock, Tailwinds Still Blow For Sporting Goods Retail
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As bleak as the retail outlook for 2023 has become, some are still forecasting growth and sporting goods stores, Hibbet, Inc (NASDAQ:HIBB) included, are included. The tailwind created by the pandemic has dwindled to almost nothing, but Americans’ love of sports and the outdoors is fueling the business, if not the growth, of names like Hibbett, Inc. Dick’s Sporting Goods (NASDAQ:DKS), Locker (NYSE:FL)And Nike (NYSE: NKE).
In the case of Hibbet, Inc., the company’s results didn’t ignite a rally because the market was expecting it. The bottom line is that Dick’s Sporting Goods might evoke the same reaction, but both are still purchasable. They represent value relative to the broader market and are an easy, hassle-free way to earn a comparable dividend. Neither pays huge dividends, but dividend growth is on the table and will help sustain price action over time.
Hibbett, Inc Q4 – The forecast could have been a lot worse
Hibbett, Inc had a great quarter driven by traffic and achieved sales prices clouded only by analyst expectations. The company generated revenue of $458.3 million, up 19%, driven by a 15.5% comparison and the addition of new stores. The bad news is that analysts were expecting more from the consensus, but the whisper numbers were favorable as the failure wasn’t as bad as it could have been.
More importantly, the company’s comps are up nearly 40% from pre-pandemic levels, driven by brand awareness, retail consolidation, and a strong bias toward e-commerce. E-commerce sales are up 21.4% YOY and 80% compared to 2019 and grew 300 basis points as a percentage of sales.
The news that will keep the market interested, and Dick’s Sporting Goods, is margin. The company increased gross margin by a marginal 10 basis points, but SG&A expenses declined 560 basis points as a percentage of revenue. This is almost entirely due to sales leverage and resulted in a significant increase in net results. GAAP earnings came in at $2.91, or more than double last year’s earnings, but analysts were expecting $0.04 more.
The forecast is positive, but here too the mood among analysts is mixed. The $9.50-$10.00 guided GAAP EPS is flat to slightly up compared to 2022 and is below the Marketbeat.com consensus figure of $10.40, but better than what the market said feared. This news should help support price action on capital repatriations and dividend payments, but is not a catalyst for a rally.
Analysts defend Hibbett, Inc despite slight lead
Marketbeat.com tracks 5 analysts who have rated Hibbett, Inc. and they all recommend the stock as a Buy. The consensus Buy rating is higher than last year’s Moderate Buy and the target price is rising again. Consensus price target is down year-over-year but up compared to last month and last quarter due to 3 new reports. These came out after the Q4 release and included 3 repeat ratings, 1 buy and 2 outperform, and 1 increase in price target to $80. All three of these analysts expect the shares to trade at $80, slightly higher than the consensus of $78.75, or about 18% above price action.
Hibbett shares are pulling back on the news but to a range where support can be expected and is showing. Given analyst sentiment, this level is also above the 150-day moving average, which should support the price. The price action could correct further in the short-term and move sideways; In the long term, it should be able to revisit the post-pandemic highs.
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