Analyzing Dicks Sporting Goods (DKS) & Office Depot (ODP)

Dicks Sporting Goods (NYSE: DKS) and Office Depot (NASDAQ:ODP) are both retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Institutional and Insider Ownership

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71.3% of Dicks Sporting Goods shares are owned by institutional investors. Comparatively, 92.7% of Office Depot shares are owned by institutional investors. 23.1% of Dicks Sporting Goods shares are owned by company insiders. Comparatively, 2.2% of Office Depot shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Dicks Sporting Goods has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Office Depot has a beta of 2.67, suggesting that its stock price is 167% more volatile than the S&P 500.

Earnings and Valuation

This table compares Dicks Sporting Goods and Office Depot’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dicks Sporting Goods $8.59 billion 0.42 $323.44 million $3.01 11.22
Office Depot $10.24 billion 0.11 $181.00 million $0.45 4.51

Dicks Sporting Goods has higher earnings, but lower revenue than Office Depot. Office Depot is trading at a lower price-to-earnings ratio than Dicks Sporting Goods, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Dicks Sporting Goods and Office Depot’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dicks Sporting Goods 3.77% 16.86% 7.32%
Office Depot 1.76% 11.74% 4.21%

Dividends

Dicks Sporting Goods pays an annual dividend of $0.90 per share and has a dividend yield of 2.7%. Office Depot pays an annual dividend of $0.10 per share and has a dividend yield of 4.9%. Dicks Sporting Goods pays out 29.9% of its earnings in the form of a dividend. Office Depot pays out 22.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dicks Sporting Goods has increased its dividend for 3 consecutive years. Office Depot is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Dicks Sporting Goods and Office Depot, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dicks Sporting Goods 2 15 12 0 2.34
Office Depot 1 5 1 0 2.00

Dicks Sporting Goods presently has a consensus price target of $35.08, suggesting a potential upside of 3.92%. Office Depot has a consensus price target of $5.08, suggesting a potential upside of 150.25%. Given Office Depot’s higher probable upside, analysts plainly believe Office Depot is more favorable than Dicks Sporting Goods.

Summary

Dicks Sporting Goods beats Office Depot on 11 of the 17 factors compared between the two stocks.

About Dicks Sporting Goods

Dick's Sporting Goods, Inc. operates as a sporting goods retailer primarily in the eastern United States. It provides hardlines, including sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing gear products; apparel; and footwear products and accessories. The company also owns and operates Golf Galaxy, Field & Stream and other specialty concept stores; and e-commerce Websites, as well as Dick's Team Sports HQ, a youth sports digital platform that offers free league management services, mobile apps for scheduling, communications and live scorekeeping, custom uniforms and fan wear, and access to donations and sponsorships. As of October 28, 2017, it operated approximately 715 DICK'S Sporting Goods locations in the United States. The company was formerly known as Dick's Clothing and Sporting Goods, Inc. and changed its name to Dick's Sporting Goods, Inc. in April 1999. Dick's Sporting Goods, Inc. was founded in 1948 and is headquartered in Coraopolis, Pennsylvania.

About Office Depot

Office Depot, Inc., together with its subsidiaries, provides various products and services. It operates in three divisions: Retail, Business Solutions, and CompuCom. The Retail division operates retail stores, which offer office supplies; technology products and solutions; business machines and related supplies; print, cleaning, breakroom, and facilities products; and office furniture in the United States, Puerto Rico, and the U.S. Virgin Islands. Its stores also provide printing, reproduction, mailing, and shipping services. As of December 31, 2017, this division operated 1,378 office supply stores. The Business Solutions division sells office supply products and services through sales forces, catalogs, and telesales, as well as through Internet sites in the United States, Puerto Rico, U.S. Virgin Islands, and Canada. The CompuCom division sells information technology (IT) outsourcing services and products in the United States, Canada, and Costa Rica. It offers a range of solutions, including end user computing (tablets, smartphones, laptops, and desktops), data center management, service desk, network infrastructure, and IT workforce solutions. This division serves its customers through IT service and sales representatives and telesales, as well as Internet sites. The company offers its products under various labels, including Office Depot, OfficeMax, Foray, Ativa, TUL, Realspace, WorkPro, Brenton Studio, Highmark, and Grand & Toy. Office Depot, Inc. was founded in 1986 and is headquartered in Boca Raton, Florida.

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