Why Dick's Sporting Goods Inc's Shares Popped 14% in July

Image source: Getty Images.

Continue Reading Below

What: Shares of Dick's Sporting Goods (NYSE: DKS) jumped 13.8% in July, according to data provided by S&P Global Market Intelligence

So what: Dick's Sporting Goods won an auction for assets of the bankrupt Sports Authority. The company is paying $15 million for the Sorts Authority name and intellectual property, including its website, loyalty program, and other customer files. It's also acquiring 31 leases for Sports Authority stores for $8 million.

This is a quick and cheap way for Dick's Sporting Goods to expand and the customer information could help the company expand both in-store and online.

<3>More From Fool.com

Continue Reading Below

LeBron James: The Next Warren Buffett?

Social Security: 3 Things to Know Before Taking Benefits Early

3 Social Security Secrets You Probably Don't Know

Now what: There's no question that Sports Authority's bankruptcy, and now store closings, will be an incremental positive for Dick's Sporting Goods. So that is good news in and of itself.

If Dick's can create value from the assets it acquired, that would be icing on the cake, particularly from the acquired leases. But the downside risk should be apparent from Sports Authority's bankruptcy assets being available in the first place: Online shopping is eating into brick-and-mortar sales, something Dick's Sporting Goods is trying to overcome. Watch earnings over the next year to see if these new stores will add to revenue and profits, and if Dick's can overcome the challenges that faced Sports Authority.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them,
just click here

Travis Hoiumfree for 30 daysconsidering a diverse range of insightsdisclosure policy