If you are wondering if Dick's Sporting Goods (NYSE: DKS) can score another win in Q4, the odds are high that it will. The company has been exhibiting strength on a sequential and YOY basis driven by product shifts, private label offerings and expanding margins that have the guidance edging higher and the analyst following suit. 

The latest report came out in November and detailed the Q3 period, marked by incredible YOY growth, a solid inventory position, and so little debt that it's easy to ignore. The takeaway for investors is that these trends are expected to continue in Q4 and F2023 despite economic headwinds, leading to higher share prices.

Trading at only 10X its earnings, the stock is valued well below other blue chip retailers, which opens the door to significant gains over the long term. 

The Analysts Are Driving Dick's Sporting Goods Higher

The analyst's activity in Dick's Sporting Goods has been nothing but bullish all year. The consensus of 19 analysts has the stock pegged at a Moderate Buy, with the sentiment trending higher. It is worth noting that all 19 analysts tracking this stock have issued a report since March 2022, including three upgrades that all contain a price target increase.

Fourteen of those reports came out in November, and the Q2 report, the latest of which was released in early December from Argus. In their view, Argus analysts see this stock trading at $140, which is 21% above the current price action and 600 bps better than the Marketbeat.com consensus estimate. 

According to Argus, Dick's Sporting Goods' revenue growth and margin expansion are supported by strength in the private label brands, the use of AI and a new line of women's specific products that hit the shelves this year. Argus increased its price target and its outlook for earnings as well, and even these figures may be conservative, given the company's obvious momentum.  

The company next reports earnings in early March. The consensus figures have the company growing revenue by only 2.3% YOY, which is less than half what the retail sector is expected to have grown over the holidays. The earnings of $2.90 is an even lower bar for the company to beat because it expects a sharp YOY contraction.

Margins are expected to come down versus last year but only marginally compared to the high-single-digit contraction implied by the consensus figures. 

Dick's Sporting Goods Institutional Headwind Vanishes

The institutions have been Dick's Sporting Goods sellers all year, including the 4th quarter when their activity spiked. Interestingly, institutional selling spiked to a multi-year high in Q4 but before the Q3 report was released.

Since then, there has been almost zero (0) activity which suggests the selling is over. As it is, the institutions hold about 75% of the stock, making it a closely held issue. So if the institutions decide they need to up their holdings, it will strengthen the tailwind brought on by the analyst. 

Dick's Sporting Goods' dividend isn't all that spectacular regarding yield, but it is a mighty attractive dividend altogether. In addition, the payout ratio is meager at only 17%, which leaves ample room for increases, and the company is increasing the payout annually.

The history shows eight years of consecutive increases and a high 98% 3-year distribution growth rate that may also continue. This means that today's DKS investors can expect their yield-on-invested dollars to advance at a more significant pace than inflation. That's a good thing.

Turning to the chart, shares of DKS have recovered from their institutionally-induced bottom and are ready to confirm a more significant reversal. The price action is testing resistance at the neckline of the Head & Shoulders Reversal, and it could easily break out to a new high. In that scenario, shares of DKS would most likely move up to the $130 to $140 level and are in line with the latest analysts' chatter.