Dick’s Sporting Goods Stock: A Bargain Despite Firearm Sales Restrictions

Dick's Sporting Goods, Inc. (DKS) shares have experienced a downward trend in their 200-day simple moving average, influenced by restrictions on firearm sales, including certain hunting product lines. Despite facing margin pressures, the company is successfully expanding its online sales presence. As of Friday, May 25, the stock closed at $30.38, marking a 5.7% increase year-to-date and a 5.3% gain since hitting a low of $28.86 on February 6, 2018. Nonetheless, the stock remains in correction territory, trading approximately 15% below its March 16 peak of $35.76.

Analysts forecast that Dick's Sporting Goods will report earnings per share between $0.42 and $0.46 when it announces results prior to market open on Wednesday, May 30. Among 23 analysts covering the stock, nine rate it as a "strong buy," 13 as a "hold," and one as a "strong sell." In the previous quarter, the retailer surpassed EPS expectations but fell short on sales figures. (See also: Demand Strong in Sporting Goods.)

The daily chart for Dick’s Sporting Goods reveals that the stock is trading comfortably above the semiannual value threshold of $26.08, indicated by the lowest horizontal line. On the upside, monthly and quarterly risk levels stand at $34.62 and $35.30 respectively. Notably, the April 5 high failed to breach the quarterly risk level. The 200-day simple moving average has declined steadily since January 22, dropping from $34.41 to $30.09 today.

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The weekly chart presents a bearish outlook, with the stock trading below its five-week modified moving average of $31.94 and significantly under its 200-week simple moving average of $44.71, which represents the "reversion to the mean." The last test of this level occurred during the week of May 12, 2017, when the average was $49.95. The 12 x 3 x 3 weekly slow stochastic indicator closed last week at 40.54, declining from 48.23 on May 18.

Considering these technical indicators, investors are advised to accumulate shares near the semiannual value level of $26.08 and consider trimming positions when the stock approaches monthly and quarterly risk thresholds of $34.62 and $35.30, respectively. (For further insights, read: Dick's Sporting Goods Phases Out Less Popular Brands.)

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