After reporting Q2 2017 earnings Mr. Market found disappointing, Dick's Sporting Goods (DKS) shares fell 20%. This leaves the company's shares undervalued at a 10.4x trailing twelve month (NYSE:TTM) P/E where they join two other sporting goods retailers that I have written about on Seeking Alpha; Hibbett Sports (NASDAQ:HIBB) and Big 5 Sporting Goods (NASDAQ:BGFV).
What Happened In The Quarter
Many investors and analysts were obviously disappointed with Q2 results as results came in below guidance in what management highlighted on the conference call as a tough retail environment. However, in my opinion, results were not that bad with net sales increasing 9.6% and same store sales remaining flat at 0.1%. Same store sales are an important metric in retail and this flat 0.1% increase was well below management's guidance of 2-3% given for Q2 and definitely was a disappointment to some. However, adjusted EPS increased to $0.96 in Q2 2017 from $0.82 in Q2 2016. On another positive note, the company repurchased $143M of common stock in the quarter which with a market cap of $3.1B as of August 16th would represent a buyback yield of 4.6% in the quarter. Repurchases are something that I always like to see from a company (especially when the share price is undervalued!) as it signals faith in the long-term prospects of the business from management.
