Can Sports Direct earnings justify the share price bounce?

After a 100% rally in the shares, is Sports Direct now at risk of a fall, thanks to the tough outlook for the UK High Street?

When is Sports Direct’s earnings date?

Sports Direct publishes first-half (H1) earnings on 16 December.

Sports Direct earnings - what does the City expect?

Earnings at Sports Direct have been under pressure since 2017, when a sharp drop followed a deterioration in the overall consumer spending environment. The situation is not expected to improve significantly in coming years either, putting some pressure on the share price.

In July, the firm reported a drop of 6% in core earnings, and it added that a fine of €674 million was expected from Belgium’s tax authority. The firm will also rebrand as Frasers Group from 16 December, reflecting the broader retail interests of the group following Mike Ashley’s purchase of stakes in the likes of House of Fraser and others. It is not clear whether this diversification is actually providing a meaningful uplift in performance, given the tough outlook for the UK High Street.

Sports Direct currently trades at 17.4 times earnings, above the five-year average of 15.4, and the highest level since the third quarter (Q3) of 2018.

How to trade Sports Direct’s earnings

Only three analysts cover the stock, and of those one has a ‘buy’ recommendation, and two are ‘sells’. The target price is 300p, 13% below the current price of 342p.

Volatility in Sports Direct peaked in late July, when the shares bottomed out around 180p and the 14-day average true range (ATR) hit a peak of 15.3. Since then it has declined, to a current 8.4, representing a move of 2.4%. On 26 July when FY earnings were released, the shares dropped by 3.7%.

Sports Direct – technical analysis

Shares in the group hit a low in late July, but this marked the nadir and since then a steady recovery has taken place. Higher lows and higher highs confirm the strength of the rally, which has seen the price double since its July low. Trendline support from the July low has come into play around 340p. Below 329p the price may well push on to 303p, support from late October.

Good news in the price for Sports Direct?

The doubling of the shares since the summer low points towards a much more optimistic outlook for Sports Direct. But now it needs to live up to expectations. The shares are no longer cheap, and a clearer strategy needs to be put in place if the rally is to be sustained in the longer term.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

See opportunity on a stock?

Don’t miss your chance. Try a risk-free trade in your demo account, and find out whether your hunch could have paid off.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance. Upgrade to a live account to take advantage.

  • Trade a wide range of popular global stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform, when it matters

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.