Why Shares of Hibbett Sports, Inc. Plunged 31% Today

MarketsMotley Fool

What happened

Shares of sporting-goods retailer Hibbett Sports, Inc. (NASDAQ: HIBB) fell as much as 30.8% in trading Friday after the company reported fiscal second-quarter 2019 results. At 3:30 p.m. EDT, shares were still down 29.4% on the day and showed no signs of a quick recovery.

Continue Reading Below

So what

Net sales for the quarter were up 12.3% to $211.1 million, on the back of a 4.1% increase in comparable-store sales. However, net loss was $1.2 million, or $0.06 per share. Analysts were expecting sales of $215.6 million and positive earnings of $0.07 per share, so the company missed expectations by a wide margin despite the growth.

What really disappointed investors was a reduction in comparable-store sales for fiscal 2019 to between negative 1% and positive 1%, which reduced the top end of guidance by 100 basis points. Guidance for earnings per share was also reduced from a range of $1.65 to $1.95 to a range of $1.57 to $1.75.

Now what

Hibbett was trying to sell investors on the idea that it could grow in-store and online sales this year, and these results undercut that thesis. In particular, the bottom-line reduction in guidance doesn't give investors any confidence the stock deserves the nearly 200% gain it had recently over its 52-week low. Hibbett isn't in dire straits yet, but the flat comparable-store sales and falling guidance have me worried enough to stay away from the stock.

10 stocks we like better than Hibbett SportsWhen 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 10 best stocks for investors to buy right now... and Hibbett Sports wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Travis Hoium 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.