Is Dick's Sporting Goods (DKS) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Dick’s Sporting Goods (DKS). DKS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 13.30. This compares to its industry’s average Forward P/E of 20.35. Over the past 52 weeks, DKS’s Forward P/E has been as high as 28.80 and as low as 10.19, with a median of 14.47.

Another valuation metric that we should highlight is DKS’s P/B ratio of 3.47. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. DKS’s current P/B looks attractive when compared to its industry’s average P/B of 5.98. Over the past year, DKS’s P/B has been as high as 3.48 and as low as 2.01, with a median of 2.67.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DKS has a P/S ratio of 0.8. This compares to its industry’s average P/S of 0.89.

Finally, our model also underscores that DKS has a P/CF ratio of 7.74. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DKS’s current P/CF looks attractive when compared to its industry’s average P/CF of 23.75. DKS’s P/CF has been as high as 10.10 and as low as 6.34, with a median of 8.37, all within the past year.

These are only a few of the key metrics included in Dick’s Sporting Goods’s strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DKS looks like an impressive value stock at the moment.

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