) to buy from neutral.
Analyst Robert Ohmes says Dick's has a 12% return on invested captial, vs. the 8% to 9% industry average, and is the best executor in the industry, with impressive inventory turns. He says the business is poised for re-acceleration after a first-half slowdown.
Ohmes sees potential upside to fourth-quarter earnings per share, followed by easy first-half fiscal 2005 (Jan.) sales comparisons. He says the retailer still is in the early stages of sustainable long-term growth: it expects 17% or better earnings growth over the next five years, with sustainable 13% to 15% annual store growth, and rising margins as the private-label business grows to 15%, from 6% to 10%.
Ohmes sees $1.95 fiscal 2004 earnings per share, and $2.35 in fiscal 2005. He has a $47 target.