Dick’s Sporting Goods: Buy Rating as Margin Expansion and Synergies Lead Growth

We initiate on DKS with a Buy & PT of $209. DICK'S is the top omni-channel sporting goods equipment,

apparel, and footwear retailer in the eastern U.S. across a diversified portfolio of banners, specialty concepts, and digital platforms. Underneath the cyclical industry, DKS executed a step- change in both the quality of their earnings and the runway for growth driven by their operational rigor and unique eye for category expansion. We are enthused by our model of FY26E EPS of $15.50, embedding accretion from the FL deal and the high margin expansion via digital proprietary solutions like GameChanger, all well below Consensus. Mgmt's choreography of 4–5% comp, gross profit expansion, and the warchest of FCF from 5Q’s of sequential retail ticket expansion has created a business with genuine pricing and scale leverage. Valuing the stock at 13.5x forward P/E embeds vulnerability to the actualization of a durable synergy capture run-rate and 100bp+ gross margin tailwind. This is 1.5x+ below peer medians and gives a conservative offset to broad-based macro softness or integration/fatigue risks. Risks include deal close/standstill and tariffs. Healthy leverage with a disciplined buyback and demonstrable synergy delivery in the first 2 years limit the downside. To us, this represents one of the rarest of set-ups where multiple compression and a contrarian view of guidance lead to a high-teens total return. Price Target Methodology: Our PT is based on a 13.5x FY2 EPS, which we believe is appropriate for a company with a high probability