What’s Wrong With Dick’s Sporting Goods’ Stock?

Weak earnings and reduction to guidance

On Aug. 25, Dick’s reported earnings for the three months ended in July. It missed both revenue and earnings per share (EPS) estimates. It had $5.59 billion in revenue compared to estimates of $5.65 billion.

More importantly, full-year EPS guidance was slashed to $10.94-$11.94, significantly below Wall Street analysts’ $14.20 estimate. It is this huge disappointment that likely has the stock collapsing this week, along with management warnings that the apparel and footwear market is in a highly promotional environment.

The main culprit for Dick’s is its recent acquisition of Foot Locker, which generated negative operating earnings in the quarter, leading to a decline in consolidated earnings.

Dick’s own business grew Q2 comps by 4.9% on the back of the FIFA World Cup and higher average tickets. At the same time, Foot Locker comps fell 3.6% and are now guided to a full-year loss of $40 million to $80 million.

Management sees long-term value in the Foot Locker business, but the price-sensitive mood of the athletic footwear market makes 2026 a challenging year.

Oops, one more stroke. Image source: Getty Images.

Time to buy the dip?

After this fall, Dick’s trades at a forward price-to-earnings ratio (P/E) of just 12, which is well below the S&P 500 index average. It is tough to value this stock with Foot Locker dragging it down, but if you believe the company can continue to dominate the sports equipment and apparel market, now could be a good time to pick up some shares on the cheap.