Why Shares of Hibbett Sports, Inc. Popped 27% Today

MarketsMotley Fool

What happened 

Shares of sporting goods retailer Hibbett Sports, Inc. (NASDAQ: HIBB) jumped as much as 26.6% in trading Friday after the company reported better-than-expected third-quarter earnings and raised guidance. At 12:05 p.m. EST, shares had given back some of their gains but were still up 12.6% on the day.

Continue Reading Below

So what

Revenue was up 0.4% to $237.8 million and net income dropped from $14.6 million a year ago to $7.6 million, or $0.37 per share. On net, the company only added one store in the quarter, so sales per store were flat.

Analysts were only expecting revenue of $217.6 million and earnings of $0.21 per share, which is why investors were so surprised with the results. On top of the beat last quarter, management increased full-year fiscal 2018 earnings guidance from $1.25-$1.35 up to $1.42-$1.50 per share. Comparable store sales are also expected to be down mid-single digits, better than previous guidance of mid- to high single digits.

Now what

This is really a case of a company beating extremely low expectations rather than reporting impressive results. Given the decline in in-store sales, I still don't think the sporting goods business is a great buy right now, and Hibbett isn't a big player in online retail. Neither of those is a good trend for Hibbett long-term, and that will keep me out of the stock despite an earnings beat today.

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 tripled 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 November 6, 2017

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.