Dick’s Sporting Goods (DKS:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Dick’s Sporting Goods(DKS:NYS)

Consumer Cyclical:Specialty Retail

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$33.89 (USD) 22/01/2019

Weighted Valuation
$34.55 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 1.9%

Valuation Models Analyst Consensus: $37.20 (USD)
(in order of importance) Comparables: $30.57 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (DKS:NYS USD)

Price 33.89
Range 33.59 – 34.34
52 week 29.77 – 39.43
Open 34.03
Vol / Avg. 1.3M/1.84M
Mkt cap 3.33B
P/E 10.26
Div/yield 0.68/0.03
EPS 3.01
Shares 98.3M
Beta 0.47

Company Description

Founded in 1948, Dick’s Sporting Goods operated 732 namesake stores in 46 states at the end of the third quarter of fiscal 2018. It also owns and operates 129 specialty stores, including Golf Galaxy and Field & Stream concept stores. Namesake Dick’s stores offer a broad assortment of sporting goods equipment, apparel, and footwear across a wide range of price points. Most stores are located in shopping centers in regional shopping areas, as well as in freestanding locations and malls.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for DKS:NYS

Using a discounted cash flow model we generated an intrinsic value of $101.53 (USD) for DKS:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

DKS:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $101.53 1% 5% 1% 5%
WACC (or Ke) 6.54 $126.96 $84.51
Terminal Growth Rate 1.50 $86.21 $124.43
Tax Rate 0.36 $108.26 $94.80
Cash Flow 696,188,500 $97.19 $105.87
Capital Expenditures 0 $101.53 $101.53
Long Term Debt 157,625,000 $101.61 $101.45

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $30.57 (USD) for DKS:NYS. We also generated a valuation of $48.65 (USD) using other metrics and comparables.
The comparable companies were GameStop (GME:NYS), KAR Auction Services (KAR:NYS), Office Depot (ODP:NAS), Party City Holdco (PRTY:NYS) and RH (RH:NYS).

Company DKS:NYS End Date Value
Earnings/Share $3.28 (USD)
Book Value/Share $18.79 (USD)
Sales/Share $85.22 (USD)
Cash Flow/Share $7.73 (USD)
EBITDA/Share $7.39 (USD)
Price Based on Comps Adjustment Factor (%)
$61.03 (USD) -54.3
$30.78 (USD) -31.0
$63.06 (USD) -49.7
$50.69 (USD) -54.7
$64.87 (USD) -24.0
DKS:NYS Ratios Used Average Values GME:NYS KAR:NYS ODP:NAS PRTY:NYS RH:NYS
9.51 PE Ratio 18.61 0.00 15.05 25.80 5.58 28.00
1.66 PB Ratio 17.19 0.82 4.11 0.64 0.97 79.39
0.37 PS Ratio 0.74 0.14 1.74 0.13 0.42 1.26
4.03 PCF Ratio 6.64 4.71 9.45 2.38 5.83 10.82
4.65 EV to EBITDA 8.77 0.00 9.56 4.38 8.10 13.05

Multiples

Using a multiples approach we generated a valuation of  $55.37 (USD) for DKS:NYS

Company DKS:NYS End Date Value
Earnings/Share $3.28 (USD)
Book Value/Share $18.79 (USD)
Sales/Share $85.22 (USD)
Cash Flow/Share $7.73 (USD)
EBITDA/Share $7.39 (USD)
Price Based on Comps Adjustment Factor
$51.02 (USD) 0
$52.48 (USD) 0
$61.70 (USD) 0
$60.29 (USD) 0
$51.39 (USD) 0
Ratios Ratio Average
PE Ratio 15.55
PB Ratio 2.79
PS Ratio 0.72
PCF Ratio 7.80
EV to EBITDA 6.95

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  DKS:NYS for the last 10 years was  2.81

We ran the Adjusted Book Value for  DKS:NYS and generated a book value of  $17.93 (USD)
By multiplying these we get an adjusted valuation of  $50.39 (USD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for DKS:NYS. The 5 analysts have a concensus valuation for DKS:NYS for 2020 of $37.20 (USD).

DKS:NYS Dick’s Sporting Goods

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 7 0 3.4444 Hold 2019-1-21

Current Price: 33.89 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.98 3.33 3.40
# EPS Analysts 7 7 2
Mean Revenue 8,393.80 8,573.00 8,757.00
# Revenue Analysts 6 6 2
Mean Target Price 37.20
Mean Cash Flow 6.18 6.36 6.57
Mean EBITDA 684.40 696.50 685.90
Mean Net Income 318.40 318.00 309.10
Mean Debt Outstanding -379.70 -645.40 -948.80
Mean Tax Rate 25.97 25.97 26.00
Mean Growth Rate 6.59
Mean Capital Expenditure 165.50 202.90 174.90

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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