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Hibbett Sports: Thesis, Results, & Outlook

Apr. 25, 2019 9:15 AM ETHibbett, Inc. (HIBB)BGFV, DKS, FL, GCO, NKE, SCVL6 Comments
Philip MacKellar profile picture
Philip MacKellar


  • Hibbett is a well-run corporation with attractive financials and a unique business model.
  • The purchase of City Gear is expected to boost the top and bottom lines.
  • A senior management transition is underway.
  • Latest quarterly and full year results were strong.
  • FY2020 outlookappears positive.


Hibbett (NASDAQ:HIBB) is a sporting goods retailer that focuses on footwear, sports apparel, and equipment. These segments accounted for 57.5%, 27.4%, and 15.1% of sales respectively in the last fiscal year. The organization’s stores are mainly located at strip malls anchored by tenants such as Walmart, in small and mid-sized communities. Geographically, its stores cover 35 states but are mainly concentrated in Texas, Georgia, Alabama, and Tennessee. Publicly traded peers include Dick's Sporting Goods (NYSE:DKS), Foot Locker (NYSE:FL), Genesco (NYSE:GCO), Shoe Carnival (NASDAQ:SCVL), and Big 5 Sporting Goods (NASDAQ:BGFV), as well as online competitors, including Amazon.

In today’s relatively overvalued market, retail is one of the industries where we continue to find many beaten up stocks. For new readers, or those who may have missed it, I wrote about downtrodden sectors in more detail in another recent article, Searching For A Bargain. Here at Contra the Heard Investment Newsletter, we have been watching the retail space for a few years, and keeping an eye on Hibbett in particular. In December, HIBB was purchased for the Vice-President’s Portfolio at $15.01. At the time, the market was under pressure, tax loss selling was in full swing, and the shares were getting hammered. This meant the valuations at the time were low on a variety of metrics, including price to sales, book value, earnings, cash flow, EV/sales, and EV/EBITDA. Since then the enterprise has rallied but is still considered a buy at under $20.00.

Hibbett’s Investment Thesis:

Hibbett initially attracted our interest years ago because of its balance sheet. Though a balance sheet is not the be-all and end-all, looking for robust financials is often a good starting point. In the latest quarter, the venture boasted a net cash position, low goodwill, and nominal debt despite the recent acquisition of privately held peer City Gear; current assets exceed

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long HIBB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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