Is Dicks Sporting (NYSE:DKS) a good hedge for your existing portfolios?
 | By Rifka Kats | Macroaxis Story |
Dicks Sporting is generating 0.3955% of daily returns assuming volatility of 2.8783% on return distribution over 60 days investment horizon. Although many risk-takers are getting more into consumer cyclical space, some of us are not very happy with Dicks Sporting's current volatility. What exactly are Dicks Sporting shareholders getting in December?
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Reviewed by Gabriel Shpitalnik
Dicks Sporting Goods has roughly 1.06 B in cash with 1.31 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 11.91. Volatility is a rate at which the price of Dicks Sporting or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Dicks Sporting may increase or decrease. In other words, similar to Dicks's beta indicator, it measures the risk of Dicks Sporting and helps estimate the fluctuations that may happen in a short period of time. So if prices of Dicks Sporting fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
How important is Dicks Sporting's Liquidity
Dicks Sporting financial leverage refers to using borrowed capital as a funding source to finance Dicks Sporting Goods ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Dicks Sporting financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Dicks Sporting's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Dicks Sporting's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Dicks Sporting's total debt and its cash.
Dicks Sporting Gross Profit
Dicks Sporting Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Dicks Sporting previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Dicks Sporting Gross Profit growth over the last 10 years. Please check Dicks Sporting's gross profit and other fundamental indicators for more details.
Dicks Sporting Volatility Drivers
Dicks Sporting unsystematic risk is unique to Dicks Sporting Goods and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Dicks Sporting you can also buy Williams Sonoma. You can also mitigate this risk by investing in the consumer discretionary sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Dicks Sporting important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Dicks Sporting income statement and balance sheet. Here are more details about Dicks volatility.Click cells to compare fundamentals
A Deeper Perspective On Dicks Sporting
The latest spike in Dicks Sporting short term price appreciation could raise concerns from retail investors as the firm it trading at a share price of 58.81 on 5,109,882 in volume. The company management teams have successfully maneuvered the firm at convenient times to take advantage of all market conditions in October. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.88. The current volatility is consistent with the ongoing market swings in October 2020 as well as with Dicks Sporting unsystematic, company-specific events.
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