Why the Market Dipped But Dick's Sporting Goods (DKS) Gained Today

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What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Dick's Sporting Goods (DKS)

DICK’S Sporting Goods Inc. was founded in 1948 in New York under the labels Dick's Clothing and Sporting Goods, Inc. It was earlier reincorporated as a Delaware corporation and changed our name to Dick's Sporting Goods, Inc. in April 1999. The company’s executive office is located in Coraopolis, Pennsylvania.

DKS is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 14.28; value investors should take notice.

One analysts revised their earnings estimate higher in the last 60 days for fiscal 2025, while the Zacks Consensus Estimate has increased $0.01 to $13.90 per share. DKS also boasts an average earnings surprise of 15%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, DKS should be on investors' short list.

Zacks Investment Research

Five Below FIVE shares soared 8.4% in the last trading session to close at $91.52. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.7% loss over the past four weeks.

Five Below’s growth is fueled by its aggressive store expansion and a strategic refocus on its core pre-teen and teen customer base. The success of its Five Beyond format alongside ongoing improvements in operational efficiency and inventory management, will drive sales growth, margin expansion, and overall profitability.

This discount retailer is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of -42.3%. Revenues are expected to be $795.56 million, up 8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Five Below, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FIVE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold).

Five Below is a member of the Zacks Retail - Miscellaneous industry. One other stock in the same industry, Dick's Sporting Goods DKS, finished the last trading session 2.5% higher at $199.98. DKS has returned -3.8% over the past month.

Dick's' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $2.68. Compared to the company's year-ago EPS, this represents a change of -6%. Dick's currently boasts a Zacks Rank of #3 (Hold).

Zacks Investment Research

In the latest trading session, Dick's Sporting Goods (DKS) closed at $196.73, marking a +1.56% move from the previous day. The stock exceeded the S&P 500, which registered a loss of 0.28% for the day. Meanwhile, the Dow experienced a drop of 0.61%, and the technology-dominated Nasdaq saw a decrease of 0.33%.

Coming into today, shares of the sporting goods retailer had lost 9.92% in the past month. In that same time, the Retail-Wholesale sector gained 1.01%, while the S&P 500 gained 0.41%.

Investors will be eagerly watching for the performance of Dick's Sporting Goods in its upcoming earnings disclosure. In that report, analysts expect Dick's Sporting Goods to post earnings of $2.68 per share. This would mark a year-over-year decline of 5.96%. In the meantime, our current consensus estimate forecasts the revenue to be $3.02 billion, indicating a 0.89% decline compared to the corresponding quarter of the prior year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $13.90 per share and a revenue of $13.25 billion, signifying shifts of +7.67% and +2.06%, respectively, from the last year.

Investors might also notice recent changes to analyst estimates for Dick's Sporting Goods. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Dick's Sporting Goods is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, Dick's Sporting Goods is currently trading at a Forward P/E ratio of 13.93. This expresses a premium compared to the average Forward P/E of 11.96 of its industry.

We can additionally observe that DKS currently boasts a PEG ratio of 2.2. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. DKS's industry had an average PEG ratio of 2.17 as of yesterday's close.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 70, finds itself in the top 28% echelons of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Zacks Investment Research