Why Dick's Sporting Goods Stock Dropped 10% on Tuesday

What happened

Shares of Dick's Sporting Goods (NYSE: DKS) are in freefall, down 10.8% as of 1:15 p.m. EDT, after the company reported its fiscal fourth-quarter earnings this morning. And yet, Dick's didn't "miss" earnings. In fact, by one measure at least, it eked out a small earnings beat.

Continue Reading Below

Heading into earnings, Wall Street analysts had predicted the company would earn $1.07 per share on sales of $2.48 billion. Dick's did in fact earn $1.07 -- on sales of $2.49 billion.

So what

Nevertheless, Dick's earnings did decline year over year, falling 4% from the $1.11 per share earned in Q4 2017 (a quarter in which the retailer benefited from a 14th week being included). Sales, similarly impacted by the calendar quirk, declined 6.5%, and same-store sales declined 2.2%.

For the year, Dick's Sporting Goods' profits climbed 8% to $3.24 per share (despite the addition of an extra reporting week in 2017). Sales declined 2% to $8.4 billion.

Now what

Looking ahead to the rest of 2019, the sporting goods retailer is predicting it will earn between $3.15 and $3.35 per share this year -- $3.25 at the midpoint, and thus basically flat against 2018. Management's plan to stop selling guns at 125 of its stores this year will likely be one of the factors hurting profit growth.

Nevertheless, despite this move, Dick's hopes to resume growing same-store sales -- between 0% and 2%. And the company will open nine new stores this year, which should result in total sales growth greater than the same-store sales figure.

10 stocks we like better than Dick's Sporting GoodsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Dick's Sporting Goods wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.