Analyzing DICK’S Sporting Goods (NYSE:DKS) and Winmark (NASDAQ:WINA)

DICK’S Sporting Goods (NYSE:DKS) and Winmark (NASDAQ:WINA) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Dividends

DICK’S Sporting Goods pays an annual dividend of $4.85 per share and has a dividend yield of 2.2%. Winmark pays an annual dividend of $3.84 per share and has a dividend yield of 0.9%. DICK’S Sporting Goods pays out 33.9% of its earnings in the form of a dividend. Winmark pays out 34.2% 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. DICK’S Sporting Goods has raised its dividend for 11 consecutive years and Winmark has raised its dividend for 5 consecutive years. DICK’S Sporting Goods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

89.8% of DICK’S Sporting Goods shares are owned by institutional investors. Comparatively, 73.3% of Winmark shares are owned by institutional investors. 32.5% of DICK’S Sporting Goods shares are owned by company insiders. Comparatively, 10.1% of Winmark shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for DICK’S Sporting Goods and Winmark, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DICK’S Sporting Goods	2	10	12	0	2.42
Winmark	0	0	1	0	3.00

DICK’S Sporting Goods presently has a consensus target price of $234.29, indicating a potential upside of 4.73%. Given DICK’S Sporting Goods’ higher possible upside, analysts clearly believe DICK’S Sporting Goods is more favorable than Winmark.

Profitability

This table compares DICK’S Sporting Goods and Winmark’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DICK’S Sporting Goods	8.52%	36.54%	11.01%
Winmark	48.84%	-103.08%	102.66%

Earnings & Valuation

This table compares DICK’S Sporting Goods and Winmark”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DICK’S Sporting Goods	$13.77 billion	1.30	$1.17 billion	$14.32	15.62
Winmark	$84.52 million	17.93	$39.95 million	$11.22	37.92

DICK’S Sporting Goods has higher revenue and earnings than Winmark. DICK’S Sporting Goods is trading at a lower price-to-earnings ratio than Winmark, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

DICK’S Sporting Goods has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, Winmark has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Summary

DICK’S Sporting Goods beats Winmark on 12 of the 17 factors compared between the two stocks.

About DICK’S Sporting Goods

DICK’s Sporting Goods, Inc. engages in the retailing of an extensive assortment of authentic sports equipment, apparel, footwear, and accessories. It also offers its products both online and through mobile applications. The company was founded by Richard T. Stack in 1948 and is headquartered in Coraopolis, PA.

About Winmark

Winmark Corporation, a resale company operates as a franchisor for small business in the United States and Canada. The company franchises retail stores concepts that buy, sell and trade merchandise. It also operates middle-market equipment leasing business. In addition, the company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato’s Closet brand; and operates stores which buys and sells used and new children’s clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. Further, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women’s apparel, shoes, and accessories under the Style Encore brand. Additionally, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.