How to Make 73% Overnight With Dick’s Sporting Goods
It’s sure been an adventure for retailers this earnings cycle…
In past Trade of the Day issues, we’ve discussed the dramatic earnings moves we’ve been seeing from names like Target (up big), Walmart (up big and then reversed lower), Home Depot (down big) and even Canada Goose (down big).
Noting these oversized moves, we decided to continue playing this trend since it’s been delivering profitable trades. And yesterday, this meant recommending members move into a new position on Dick’s Sporting Goods (NYSE: DKS).
Truth be told, given what we’ve seen lately, I thought Dick’s would move lower in reaction to earnings. Boy, was I wrong! Luckily, since we structure our earnings recommendations to have exposure for moves in either direction, being “wrong” still resulted in an overnight winner of 73%.
Here’s how it all played out…
Earlier this morning, Dick’s reported a net income of $57.6 million, which was dramatically higher than the $37.8 million it reported last year.
Adjusted earnings per share of $0.52 trounced the FactSet consensus of $0.37, while sales of $1.96 billion also came in ahead of the FactSet guidance of $1.91 billion.
Breaking down each segment, Dick’s reported gains across the board. E-commerce sales were up 13%. Same-store sales rose 6% – making this the company’s best result since 2013.
On this news, BofA Securities upgraded Dick’s Sporting Goods from neutral to buy – raising its price target from $43 up to $55 on the strength of the company’s first-ever Yeezy launch in September (which, as you sneakerheads know, is Kayne West’s shoe brand).
Dick’s also reported a better selection of Nike and Adidas brands, which helped these results. With the 2019 holiday shopping season set to officially kick off this Friday, BofA Securities now believes Dick’s is very well-positioned for Q4.
First thing this morning, I wrote…
With a massive short % of float currently sitting at 29.23%, this just might be the report that kick-starts a #DKS recovery back to the 2017 levels around $50 and above.
In response to this news, shares of Dick’s Sporting Goods exploded. At one point, the shares were 20% higher!
Action Plan: For all War Room traders who entered my recommended Dick’s Sporting Goods earnings position, they paid a total of $2.90 to enter and $5.03 to exit – which was an overnight gain of 73%.
Not bad for being “wrong” about its direction, right?
As you’ll see below, some War Room members did even better than 73%! Do you want to start hitting these winners? If so, you’re invited to join me in The War Room today!
“In at $1.40, out at $4.15. Ring the register!” – Terry J.
“Quick hit on DKS this morning 44 calls. In at $0.90 out at $1.75 in 20 minutes.” – John T.
“Just closed DKS strangle in at $1.85, out at $4.65… thanks BB.” – Femi G.
“This was my first real trade in The War Room: Thank you for the great recommendation.” – Brian L.
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.