Why Hibbett Sports' Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Hibbett Sports fell as much as 12.5% today after the company reported earnings.

So what: Second-quarter revenue rose 13% to $186.2 million and net income was up 33% to $10.5 million, or $0.40 per share. Both figures were ahead of estimates, but the company lowered its fiscal 2014 earnings outlook from $2.85-$3.05 per share down to $2.65-$2.77 per share.

Now what: A drop in expected same-store sales revenue increase was the reason for the reduced guidance. Consumers don't seem to be spending freely this back-to-school season, something many retailers are dealing with. With shares now trading at 20 times the low end of guidance, I think the stock is a little overvalued given the growth rate, so I'll sit out the discount today.

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The article Why Hibbett Sports' Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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