DICK’S Sporting Goods Earnings Preview – Will the Acquisition Strategy Pay Off?

DICK'S Sporting Goods' stock (NYSE: DKS) is flat YTD leading in to earnings, with the company set to release its latest numbers before tomorrow morning's opening bell.

The is looking for earnings per share  of $4.30 for Q2 2025, a significant jump from the $3.20 EPS reported in Q1, yet a drop on the $4.37 Y/Y. Revenue is also projected to climb 3.92% Y/Y to $3.61billion (also above Q1's $3.17 billion).

This optimism stems from strong performance in key product categories, particularly footwear, and the continued expansion of its digital commerce platform. The company itself has reaffirmed its full-year 2025 EPS guidance, setting a range between $13.80 and $14.40.

DICK'S Sporting Goods has demonstrated a solid financial foundation, as evidenced by its Q1 2025 results. The company reported revenue of $3.17 billion, with a net income of $264.29 million and an EPS of $3.33. The gross profit margin of $1.17 billion reflects effective cost management and a healthy demand for its products.

The robust Q1 performance not only exceeded expectations but also solidified the company's confidence in its full-year outlook.

The Foot Locker Gamble: A Transformative Acquisition

The most significant development for DICK'S Sporting Goods this year has been its definitive agreement to acquire Foot Locker, Inc. for approximately $2.5 billion. This bold move, expected to close in the second half of 2025, is designed to accelerate DICK'S global reach and unlock substantial value for stakeholders.

The company projects that the acquisition will be accretive to EPS in the first full fiscal year post-close, with expected cost synergies ranging from $100 to $125 million over the medium term.

However, this acquisition has not been without its skeptics. Integrating a company the size of Foot Locker presents significant challenges, and the market has reacted with some uncertainty.

In a sign of an ongoing committed to returning value to its shareholders, the company declared a recent quarterly cash dividend of $1.2125 per share, payable back late June, whilst additionally repurchasing 1.4 million shares under its share repurchase program for $299 million in the 13 weeks ended May 3, 2025.

Analyst opinions on DICK'S Sporting Goods are currently mixed. While many maintain a positive outlook, concerns linger about the potential challenges associated with the Foot Locker acquisition.

Telsey Advisory recently lowered its price target to $220 from $250, maintaining an “Outperform” rating. The firm believes that, while the acquisition may put near-term pressure on the stock, DICK'S can ultimately unlock significant value and drive profitable share gains.

Truist analyst Joseph Civello holds a “Buy” rating with a $245 price target, suggesting that the market's initial negative reaction to the acquisition announcement was an overreaction.

What to Watch

• Comparable Sales Growth: A key indicator of the company's organic growth.
• Gross Margin: Reflects the company's ability to manage costs and maintain profitability.
• Digital Sales Growth: A measure of the success of its online platform.
• Integration Progress: commentary on the progress of the Foot Locker integration .
• Updated Guidance: Any changes to the full-year EPS and revenue guidance.

DICK'S Sporting Goods is at a pivotal moment. Its Q2 earnings report will provide valuable insights into its current performance and the potential of its ambitious growth strategy. The Foot Locker acquisition represents a significant opportunity, but also poses considerable risks.