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Hibbett Stock, Tailwinds Still Blow For Sporting Goods Retail

Hibbett Sports Stock

As gloomy as the retail outlook has become for 2023 there are some still forecasting growth and sporting goods stores, Hibbet, Inc (NASDAQ: HIBB) included, are among them. The tailwinds put in place by the pandemic have dwindled to nearly nothing, but Americans’ love of sports and the outdoors is sustaining business if not growth for names like Hibbett, Inc, Dick’s Sporting Goods (NASDAQ: DKS), Footlocker (NYSE: FL), and Nike (NYSE: NKE).

In the case of Hibbet, Inc.'s case, the company’s results did not spark a rally because the market expected them. The takeaway is that Dick’s Sporting Goods may get the same reaction, but both are still buyable. They represent a value relative to the broad market and an easy, low-stress way to earn a comparable dividend. Neither pays enormous dividends, but dividend growth is on the table and will help sustain price action over time. 

Hibbett, Inc Q4 - Guidance Could Have Been Much Worse 

Hibbett, Inc had a great quarter driven by traffic and realized selling prices that is only marred by the analysts' expectations. The company produced $458.3 million in revenue for a gain of 19% which was driven by a 15.5% comp and the addition of new stores. The bad news is that analysts were expecting more regarding the consensus, but the whisper numbers were more favorable as the miss 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, consolidation in the retail industry, and a heavy lean into eCommerce. eCommerce sales are up 21.4% YOY and 80% compared to 2019 and grew 300 basis points as a percentage of revenue. 

The news that will keep the market interested in this and Dick’s Sporting Goods is the margin. The company widened the gross margin by a small 10 bps, but the SG&A expense contracted by 560 bps as a percentage of revenue. This is due almost entirely to sales leverage and drove a significant increase in bottom-line results. The GAAP earnings came in at $2.91 or more than double last year’s haul, but the analysts expected $0.04 more. 

Guidance is positive but, again, is mixed regarding the analyst sentiment. The $9.50 to $10.00 in guided GAAP EPS is flat to slightly up compared to 2022 and short of the $10.40 consensus figure but better than what the market feared may come. This news should help support the price action due to capital returns and dividend payments but is not a catalyst for a rally. 

Analysts Defend Hibbett, Inc Despite Light Guidance is tracking 5 analysts with ratings on Hibbett, Inc., and all think this stock is a Buy. The consensus Buy rating is up from last year’s Moderate Buy, and the price target is increasing again. The consensus price target is down compared to last 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 reiterated ratings, 1 Buy and 2 Outperform, and 1 price target increase to $80. All 3 of these analysts have the stock trading at $80, slightly higher than the consensus $78.75 or about 18% above the price action. 

Hibbett shares are pulling back on the news but to a range where support can be expected and support is showing itself. Given the analysts' sentiment, this level is also above the 150-day moving average, which should help support the price. The price action may continue to correct and move sideways in the near term; long term it should be able to move back up to the post-pandemic highs. 

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