Dicks Sporting Goods Inc (DKS) receives a strong valuation score of 70 from InvestorsObserver analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock’s price, earnings, and growth rate to determine if it represents a good value. DKS holds a better value than 70% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.
DKS’s trailing-12-month Price to Earnings (PE) ratio of 9.6 puts it below the historical average of roughly 15. DKS is a good value at its current trading price as investors are paying less than what its worth in relation to the company’s earnings. DKS’s trailing-12-month earnings per share (EPS) of 10.65 does justify what it is currently trading at in the market. Trailing PE ratios, however, do not factor in a company’s projected growth rate, resulting in some firms having high PE ratios due to high growth potentially enticing investors even if current earnings are low.
DKS’s 12-month-forward PE to Growth (PEG) ratio of 1.64 is considered a poor value as the market is overvaluing DKS in relation to the company’s projected earnings growth due. DKS’s PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company’s overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
All together these valuation metrics paint a pretty poor picture for DKS at its current price due to a overvalued PEG ratio due to strong growth. The PE and PEG for DKS are worse than the average of the market resulting in a valuation score of 70.