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In this article, I will feature one sporting goods store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Dick's Sporting Goods (DKS) operates as a sports and fitness retailer primarily in the Eastern United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Dick's Sporting Goods' insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
John DukenEVPSep 2399,000No119,481 shares45.3%
Joe OliverSVPSep 20-2446,761No63,060 shares + 4,489 options40.9%
Joe SchmidtCOOSep 20-2475,000No91,394 shares45.1%
Michele WilloughbyEVPSep 2410,125No56,064 shares + 5,625 options14.1%
David MosséSVPSep 206,000No36,084 shares14.3%

There have been 236,886 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Dick's Sporting Goods' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
September 2013236,8860
August 201306,400
July 201300
June 201300
May 201300
April 201300
March 2013444,5371,000
February 201300
January 201300

There have been 681,423 shares sold and there have been 7,400 shares purchased by insiders this year.

Financials

Dick's Sporting Goods reported the second-quarter, which ended August 3, financial results on August 20 with the following highlights:

Revenue$1.5 billion
Net income$84.2 million
Cash$134.8 million
Debt$14.7 million

Outlook

On August 20, Dick's Sporting Goods revised its full year guidance to a range of $2.60 to $2.65 per share, primarily due to lower sales expectations for the second half of the year, which are a result of the company's belief that consumers will remain relatively cautious.

Competition

Dick's Sporting Goods' competitors include Hibbett Sports (HIBB) and Big 5 Sporting Goods Corp. (BGFV). Here is a table comparing these companies.

CompanyDKSHIBBBGFVIndustry Average (Sporting Goods Stores)
Market Cap:6.60B1.48B359.98M1.48B
Employees:11,1002,6009,0002.60K
Qtrly Rev Growth (yoy):0.070.130.060.02
Revenue:5.98B846.57M981.55M846.57M
Gross Margin:0.320.360.330.36
EBITDA:679.22M133.88M62.88M133.88M
Operating Margin:0.090.140.040.09
Net Income:328.87M75.08M25.82MN/A
EPS:2.612.841.182.84
P/E:20.1520.0813.9620.08
PEG (5 yr expected):1.351.460.761.46
P/S:1.091.750.371.75

Dick's Sporting Goods has the second-highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
HIBB073,800
BGFV0920,537

Only Dick's Sporting Goods has seen intensive insider selling during the past 30 days.

Conclusion

There have been five different insiders selling Dick's Sporting Goods and there have not been any insiders buying Dick's Sporting Goods during the past 30 days. All five of these insiders decreased their holdings by more than 10%. Dick's Sporting Goods has an insider ownership of 0.40%.

Dick's Sporting Goods is trading at a P/E ratio of 20.15 and a forward P/E ratio of 16.99. The company has a book value of $13.54 per share and the stock has a dividend yield of 0.95%.

Before entering short Dick's Sporting Goods, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

Source: Insiders Are Selling Dick's Sporting Goods