Dick's Sporting Goods Stock: Still Cheap Despite Rifle Limits

Shares of Dick's Sporting Goods, Inc. (DKS) have seen their 200-day simple moving average  sliding downward on limitations on firearms sales, including some hunting brands. The company has been facing margin issues but is making strides in online sales. Shares of the retailer closed Friday, May 25, at $30.38, up 5.7% year to date and up 5.3% since its 2018 low of $28.86 set on Feb. 6. However, the stock is in correction territory at 15% below its March 16 high of $35.76.

Analysts expect Dick's Sporting Goods to post earnings per share of 42 cents to 46 cents when the company reports results before the opening bell on Wednesday, May 30. There are 23 analysts known to be covering Dick's Sporting Goods, and nine give the stock a "strong buy" rating, 13 rate it as a "hold" and one has it as a "strong sell." Last quarter, the retailer beat EPS estimates but missed sales expectations. (See also: Demand Strong in Sporting Goods.)

The daily chart for Dick's Sporting Goods

The daily chart for Dick's Sporting Goods shows that the stock is well above my semiannual value level at $26.08, as shown by the lowest horizontal line. On the upside, there are two horizontal lines that are my monthly and quarterly risky levels of $34.62 and $35.30, respectively. The April 5 high was a failed test of the quarterly risky level. Note how the stock's 200-day simple moving average has been sliding down since Jan. 22, when the average was $34.41. Today, it's at $30.09.

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The weekly chart for Dick’s Sporting Goods

The weekly chart for Dick's Sporting Goods is negative, with the stock below its five-week modified moving average of $31.94. The stock is well below its 200-week simple moving average of $44.71, which is also the "reversion to the mean." This level was last tested during the week of May 12, 2017, when the average was $49.95. The 12 x 3 x 3 weekly slow stochastic reading ended last week 40.54, down from 48.23 on May 18.  

Given these charts and analysis, investors should buy weakness to my semiannual value level of $26.08 and reduce holdings on strength to my monthly and quarterly risky levels of $34.62 and $35.30, respectively. (For additional reading, see: Dick's Sporting Goods Dropping Unpopular Brands.)