June 1, 2023
Top 10 Stock Dick's Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Dick's – Top 10 Stock in SDG 15: Life on Land
Dick's is listed as a top 10 stock on June 01, 2023 in the market index SDG 15 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 52 (high 52% performer), Obermatt assesses an overall buy recommendation for Dick's on June 01, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Specialty Stores |
| Index | Employee Focus US, Human Rights, SDG 13, SDG 15, SDG 5, S&P MIDCAP |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Dick's Buy
| 360 METRICS | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 39 |
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| GROWTH | ||||||||
| GROWTH | 59 |
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| SAFETY | ||||||||
| SAFETY | 45 |
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| SENTIMENT | ||||||||
| SENTIMENT | 67 |
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| 360° VIEW | ||||||||
| 360° VIEW | 52 |
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ANALYSIS: With an Obermatt 360° View of 52 (better than 52% compared with alternatives), overall professional sentiment and engagement for the stock Dick's are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Dick's. The consolidated Growth Rank has a good rank of 59, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 59% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 67, which means that professional investors are more optimistic about the stock than for 67% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 39, which means that the share price of Dick's is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 61% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 45, which means that the company has a financing structure that is riskier than 55% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° View of 52, Dick's is better than 52% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 59), and professional market sentiment is positive (Sentiment Rank of 67), but value and safety are below average. The Safety Rank is the least important of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take one minus the growth rank, that is the minimum level that the value rank should have. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Dick's positive
ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock Dick's is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and the other half above average for Dick's. Analyst Opinions are at a rank of 54 (better than 54% of alternative investments). Currently, stock research analysts tend to recommend a stock investment in the company. There are also many institutional investors invested in the stock, represented by a Professional Investors rank of 98 which means that currently, professional investors hold more stock in this company than in 98% of alternative investment opportunities. But Analyst Opinions Change has a rank of 49, which means that stock research experts are changing their opinions for the worse in recommending investing in the company. In other words, they are getting more critical of investments in Dick's. Furthermore, Market Pulse has a rank of 26, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 74% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), Dick's has a reputation among professional investors that is above-average compared with that of its competitors. Three below-market sentiment indicators are a sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it may be around the corner. ...read more
Value Strategy: Dick's Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 39 (worse than 61% compared with alternatives), Dick's shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Dick's. Price-to-Profit (also referred to as price-earnings, P/E) is 55 which means that the stock price compared with what market professionals expect for future profits is lower than for 55% of comparable companies, indicating a good value concerning Dick's's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with an Price-to-Book Rank of 21, which means that the stock price is lower compared with invested capital than for 21% of comparable investments. On the other hand, Price-to-Sales is less favorable than 75% of alternatives (only 25% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 22% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 39, is a HOLD recommendation based on Dick's's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. This needs to be investigated, and the company's optimism verified before deciding to buy the stock. ...read more
Growth Strategy: Dick's Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 59 (better than 59% compared with alternatives), Dick's shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Dick's. Profit Growth has a rank of 70, which means that currently professionals expect the company to grow its profits more than 70% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 99 (above 99% of alternative investments). But Sales Growth has a below the median rank of 20, which means that, currently, professionals expect the company to grow less than 80% of its competitors, and Capital Growth also has a lower rank of 26. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 59, is a BUY recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Dick's. ...read more
Safety Strategy: Dick's Debt Financing Safety below-average
| SAFETY METRICS | June 1, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 40 |
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| REFINANCING | ||||||||
| REFINANCING | 50 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 62 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 45 |
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ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Dick's has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Dick's is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Dick's. Refinancing is at 50, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Liquidity is also good at 62, meaning the company generates more profit to service its debt than 62% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 40, which means the company has an above-average debt-to-equity ratio. It has more debt than 60% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 45 (worse than 55% compared with alternatives), Dick's has a financing structure that is riskier than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Dick's could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Dick's Below-Average Financial Performance
| COMBINED PERFORMANCE | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 39 |
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| GROWTH | ||||||||
| GROWTH | 59 |
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| SAFETY | ||||||||
| SAFETY | 62 |
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| COMBINED | ||||||||
| COMBINED | 38 |
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ANALYSIS: With an Obermatt Combined Rank of 38 (worse than 62% compared with investment alternatives), Dick's (Specialty Stores, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Dick's are low in value (priced high) with a consolidated Obermatt Value Rank of 39 (worse than 61% of alternatives), and are riskily financed (Safety Rank of 45, which means above-average debt burdens) but show above-average growth (Growth Rank of 59). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 38, is a hold recommendation based on Dick's's financial characteristics. As the company Dick's shows low value with an Obermatt Value Rank of 39 (61% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 59% of comparable companies (Obermatt Growth Rank is 59). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 45 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Dick's, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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