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Category: Stock Market and Hibbett Sports
Date: 25 November 2019 Stock Price: $28.69 We take a look at the 3rd quarter earnings release of their 2020 fiscal year of Hibbett Sports the athletics inspired fashion retailer selling major brands such as Nike, Adidas and Under Armour. The stock surged on Friday 22 November after the release of their latest earnings
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About Hibbett Sports
Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with more than 1,100 stores under the Hibbett Sports and City Gear banners, primarily located in small and mid-sized communities. Founded in 1945, Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan, Adidas, and Under Armour. Consumers can browse styles, find new releases, shop looks and make purchases online or in their nearest stor
Overview of Hibbett Sports' 3rd quarter 2020 earnings report
Data below refers to the most recent quarter unless specified otherwise
- Sales: $275.475 million (up from $216.888 million from the same quarter of the previous year)
- Sales increased by 27.01% over the last 12 months
- Cost of goods sold: $185.307 million (up from $146.376 million for the same quarter of the previous year)
- Cost of goods sold increased by 26.6% over the last 12 months
- Net income: $2.265million (increased from $1.499 million for the same quarter of the previous year)
- Diluted earnings per share: $0.13 (increased from $0.08 for the same quarter of the previous year)
- PE ratio of Hibbett Sports: 19.75
- Diluted weighted-average shares outstanding: 17.815 million (down -4.65% from 18.675 million for the same quarter of the previous year)
- Cash and cash equivalents: $77.372 million
- Cash and cash equivalents per share: $4.34
- Cash and cash equivalents makes up 15.1% of Hibbett Sports' market capital
- Cash and cash equivalents makes up 10.1% of Hibbett Sports' total assets
- Inventories: $288.876 million
- Inventories makes up 37.7% of Hibbett Sports' total assets
- Stockholders equity in Hibbett Sports: $336.159 million
- Stockholders equity per share: $18.86
- Hibbett Sports is trading at 1.52 times its stockholders equity per share which is outside the expected range of between 2 and 4 that most firms tend to trade at
Hibbett Sports' management commentary on the results and earnings guidance
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Nov. 22, 2019-- Hibbett Sports, Inc. (NASDAQ/GS: HIBB), an athletic‑inspired fashion retailer, today provided financial results for its third quarter ended November 2, 2019, and business updates.
Jeff Rosenthal, President and Chief Executive Officer, stated, “Our 10.7% increase in comparable sales in the third quarter represents our strongest quarterly increase since first quarter Fiscal 2013 and our fourth consecutive quarter with positive comparable sales. The business continues to perform very well as evidenced by the positive comparable performance in both our brick and mortar locations and our e‑commerce business. This sales growth has been made possible by our team’s execution of our strategic focus to lead with sneakers and connect toe-to-head concepts within our apparel and team sports businesses. Our e-commerce business continues to outperform expectations, as the business is now delivering over 10% of our total sales. During the third quarter, we integrated the City Gear website into our existing Hibbett platform with great success. City Gear has now been part of Hibbett for one year, and the acquisition will continue to enhance results through synergies as we complete the integration over the next three months. We are very enthusiastic about our business going forward and are pleased to increase our annual sales and earnings guidance.”
Jeff Rosenthal, President and Chief Executive Officer, stated, “Our 10.7% increase in comparable sales in the third quarter represents our strongest quarterly increase since first quarter Fiscal 2013 and our fourth consecutive quarter with positive comparable sales. The business continues to perform very well as evidenced by the positive comparable performance in both our brick and mortar locations and our e‑commerce business. This sales growth has been made possible by our team’s execution of our strategic focus to lead with sneakers and connect toe-to-head concepts within our apparel and team sports businesses. Our e-commerce business continues to outperform expectations, as the business is now delivering over 10% of our total sales. During the third quarter, we integrated the City Gear website into our existing Hibbett platform with great success. City Gear has now been part of Hibbett for one year, and the acquisition will continue to enhance results through synergies as we complete the integration over the next three months. We are very enthusiastic about our business going forward and are pleased to increase our annual sales and earnings guidance.”
Balance Sheet and Stock Repurchases
Hibbett ended the third quarter of Fiscal 2020 with $77.4 million of available cash and cash equivalents on the consolidated balance sheet. As of November 2, 2019, Hibbett had $8.0 million in debt outstanding and $92.0 million available under its credit facilities. During the third quarter, the Company repurchased 371,976 shares of common stock for a total expenditure of $7.0 million. Approximately $167.2 million remained authorized for future stock repurchases through January 29, 2022.
Fiscal 2020 Outlook
The Company updated its full-year guidance for Fiscal 2020:
Updated Previous
Comparable store sales 4.0%-6.0% 1.0% - 2.0%
Net store closings (80) - (85) (80) - (85)
Earnings per diluted share $1.55 - $1.65 $1.35 - $1.50
Expected impact of non-recurring items (non-GAAP) ($0.75) - ($0.85) ($0.75) - ($0.80)
Earnings per diluted share excluding non-recurring items (non-GAAP) $2.30 - $2.50 $2.15 - $2.25
Gross margin: flat - 20bps (30)bps - (40)bps
Gross margin excluding non-recurring items (non-GAAP) (10)bps - 10bps (40)bps - (50)bps
SG&A expense rate change: 60bps - 80bps 50bps - 70bps
SG&A expense rate change excluding non-recurring items (non-GAAP) (60)bps - (80)bps (40)bps - (60)bps
Depreciation: (10)bps - (20)bps (10)bps - (20)bps
Tax rate: 25.5% 25.5%
Capital expenditures $15M - $18M $18M - $20M
Share repurchase: $25M - $30M $25M - $30M
Hibbett ended the third quarter of Fiscal 2020 with $77.4 million of available cash and cash equivalents on the consolidated balance sheet. As of November 2, 2019, Hibbett had $8.0 million in debt outstanding and $92.0 million available under its credit facilities. During the third quarter, the Company repurchased 371,976 shares of common stock for a total expenditure of $7.0 million. Approximately $167.2 million remained authorized for future stock repurchases through January 29, 2022.
Fiscal 2020 Outlook
The Company updated its full-year guidance for Fiscal 2020:
Updated Previous
Comparable store sales 4.0%-6.0% 1.0% - 2.0%
Net store closings (80) - (85) (80) - (85)
Earnings per diluted share $1.55 - $1.65 $1.35 - $1.50
Expected impact of non-recurring items (non-GAAP) ($0.75) - ($0.85) ($0.75) - ($0.80)
Earnings per diluted share excluding non-recurring items (non-GAAP) $2.30 - $2.50 $2.15 - $2.25
Gross margin: flat - 20bps (30)bps - (40)bps
Gross margin excluding non-recurring items (non-GAAP) (10)bps - 10bps (40)bps - (50)bps
SG&A expense rate change: 60bps - 80bps 50bps - 70bps
SG&A expense rate change excluding non-recurring items (non-GAAP) (60)bps - (80)bps (40)bps - (60)bps
Depreciation: (10)bps - (20)bps (10)bps - (20)bps
Tax rate: 25.5% 25.5%
Capital expenditures $15M - $18M $18M - $20M
Share repurchase: $25M - $30M $25M - $30M
Hibbett Sports (NASDAQ:HIBB) stock price history
The image below, obtained from Google, shows the stock price history of Hibbett Sports' (NASDAQ: HIBB) over the last 5 years. And it has not been a very good time for Hibbett stockholders. 5 years ago the stock of Hibbett was trading around $50.20 and its currently trading at $28.69. That's a strong decline of -42.8% over the last 5 years. The stock of Hibbett Sports is trading at closer to its 52 week high of $30.98 than it is to its 52 week low of $13.08, which to us is a clear indication that the short term momentum and sentiment towards Hibbett Sports very positive.
Recent coverage of Hibbett Sports
The extract below covers the latest regarding Hibbett as obtained from TheStreet.com
NEW YORK, Nov. 5, 2019 /PRNewswire/ -- Hibbett Sporting Goods Inc. (NASDAQ: HIBB), a leading athleisure and specialty footwear retailer has partnered with Klarna, the leading global alternative payments provider, to give U.S. shoppers a new flexible option at checkout. Customers can now choose to pay for products in four equal payments collected bi-weekly - with no interest or fees.
NEW YORK, Nov. 5, 2019 /PRNewswire/ -- Hibbett Sporting Goods Inc. (NASDAQ: HIBB), a leading athleisure and specialty footwear retailer has partnered with Klarna, the leading global alternative payments provider, to give U.S. shoppers a new flexible option at checkout. Customers can now choose to pay for products in four equal payments collected bi-weekly - with no interest or fees.
Hibbett Sports (NASDAQ: HIBB) latest stock valuation
So based on Hibbett Sports latest earnings report and their fiscal guidance what do we value the company's stock at? Based on Hibbett Sports earnings report and fiscal guidance provided our valuation model gives a target (full value) price for Hibbett Sports at $25.40 a stock. We therefore believe the stock of Hibbett Sports is slightly overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $25.40 A good entry point into the stock of Hibbett Sports would therefore be at $22.90 or below. We expect the stock of Hibbett Sports to pull back slightly from its current levels in coming weeks and months to levels closer to our target (full value) price
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $25.40 A good entry point into the stock of Hibbett Sports would therefore be at $22.90 or below. We expect the stock of Hibbett Sports to pull back slightly from its current levels in coming weeks and months to levels closer to our target (full value) price