Why Dick's Sporting Goods Stock Is Down After a Beat-And-Raise Quarter

Dick’s Sporting Goods ( DKS ) stock is trading deep in negative territory Wednesday even after the athletic apparel and equipment retailer beat top- and bottom-line expectations for its second quarter and raised its full-year outlook.

In the 13 weeks ended August 3 , Dick's Sporting Goods reported revenue of $3.5 billion, an increase of 7.8% year-over-year, driven by a 4.5% jump in comparable-store sales. Its earnings per share (EPS) were up 55% from the year-ago period to $4.37.

The quarterly results were "powered by our compelling omni-channel athlete experience, differentiated product assortment, best-in-class teammate experience and our ability to create deep engagement with the Dick's brand," said Dick's Sporting Goods CEO Lauren Hobart in a statement. "Our Q2 comparable-store sales were driven by growth in average ticket and transactions, and with growth in sales, gross margin expansion and SG&A leverage, we delivered earnings-before-taxes margin of nearly 14%."

The results beat analysts' expectations. Wall Street was anticipating revenue of $3.44 billion and earnings of $3.83 per share, according to CNBC .

"Because of our strong Q2 performance and the confidence we have in our business, we are again raising our full-year outlook," Hobart said.

The company now anticipates comparable-store sales growth in the range of 2.5% to 3.5% and earnings per share of $13.55 to $13.90. This compares with its previous outlook of comparable-store sales growth between 2% to 3% and EPS in the range of $13.35 to $13.75.

Dick's added that it continues to anticipate revenue will arrive between $13.1 billion to $13.2 billion.

However, the midpoints of Dick's outlook for the full fiscal year failed to meet analysts' high expectations for the year. Specifically, Wall Street is forecasting revenue of $13.24 billion and earnings of $13.79 per share.

Is Dick's Sporting Goods stock a buy, sell or hold?

Even with today's drop, Dick's Sporting Goods is up more than 47% for the year-to-date. And Wall Street is bullish on the consumer discretionary stock .

According to S&P Global Market Intelligence , the average analyst target price for DKS stock is $239.08, representing implied upside of roughly 10% to current levels. Meanwhile, the consensus recommendation is a Buy.

However, not everyone is so upbeat toward Dick's Sporting Goods. Financial services firm Wedbush, for instance, has a Neutral rating (equivalent to a Hold) and a $250 price target on DKS stock.

While Wedbush analyst Seth Basham anticipated a beat-and-raise quarter from the sporting goods retailer, he says high investor expectations, decelerating consumer spending trends, and an elevated valuation keeps him on the sidelines at the moment.

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