hibbett_fall 2016 web

November16,2016

HIBBETT SPORTS INCORPORATED HIBB/NASDAQ

Continuing Coverage: Hibbett Builds On Its Winning Streak

Investment Rating:

PRICE: $44.53 S&P500: 2,176.94 DJIA: 18,868.14 RUSSELL2000: 1,302.20 • Hibbett’s Strategy of focusing on smaller, less-‐served markets has certainly

worked • Productivity improvements help achieve a better customer experience • Growing in contiguous markets adds to distribution efficiency and lower

cost • E-‐commerce will contribute to increased sales • Superior customer service through invested human capital leads to brand

loyalty • Our 12-‐month target price is $52.

Valuation 2016 A 2017 E 2018 EEPS $ 2.92 $ 3.43 $ 3.71P/E 15.3x 13.0x 12.0x CFPS $ 2.42 $ 6.06 $ 4.32P/CFPS 18.4x 7.3x 10.3x

Market Capitalization Stock DataEquity Market Cap (MM): $ 979.66 52-‐Week Range: $27.58 -‐ $45.85

Enterprise Value (MM): $ 954.69 12-‐Month Stock Performance: 46.82%

Shares Outstanding (MM): 22.00 Dividend Yield: Nil

Estimated Float (MM): 21.80 Book Value Per Share: $ 14.493-‐Mo. Avg. Daily Volume: 354,000 Beta: 1.20Short Ratio 16.14 EV/EBITDA 7.1x

Company Quick View:

Hibbett Sports is on deck with Sports Authority striking out. Hibbett Sports is a sporting good retail operator headquartered in Birmingham, Alabama. Hibbett Sports provides name brand footwear, apparel and equipment to its loyal customers. The Company specializes in local and regional markets. Hibbett Sports is known for its superior customer service and small market focus. Company Website:www.hibbett.com

Analysts: Investment Research Manager: Cole Mancuso Matt Rizner Jacob Singer Daniel Iavarone Daniel Karp

The BURKENROAD REPORTS are produced solely as a part of an educational program of Tulane University's Freeman School of Business. The reports are not investment advice and you should not and may not rely on them in making any investment decision. You should consult an investment professional and/or conduct your own primary research regarding any potential investment.

Wall Street's Farm Team

BURK

ENRO

AD R

EPO

RTS

4/1/13 4:47 PM

Hibbett Sports Incorporated (HIBB) BURKENROAD REPORTS (www.burkenroad.org) November 16, 2016

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Figure 1: Five-‐year Stock Price Performance

Source: Yahoo Finance

INVESTMENT SUMMARY Our team gives Hibbett Sports an investment rating of Market Perform by assigning a 12 month target stock price of $52. We predict that the November23rd price of $41.50 will increase by 25.3% to reach our target stock price. We forecasted revenue by using a quantity and price method focusing on revenue per square foot and total store square footage. For this forecast, we factored in the seasonality of the sporting goods industry by using historical data to predict revenue per square foot by quarter. Hibbett Sports is a sporting goods retailer headquartered in Birmingham, Alabama. Hibbett Sports focuses on the small to mid-‐sized markets located in the Mid-‐Atlantic, Midwest and Southern regions of the U.S. The Company offers high quality and regionally specific apparel, footwear, and equipment in order to appeal to its customers in different markets. Hibbett’s ability to respond quickly to major sporting events allows the Company to appeal to thelocal interests of its customers. Hibbett employs 3,300 full time and 5,600 part-‐time employees that are dedicated to establishing strong relationships. The Company operates 1,044 retail stores throughout 33 states. Hibbett takes advantage of efficiencies in logistics, marketing, and regional management by opening new stores that are within a two-‐hour driving distance from an existing store. Hibbett Sports focuses on developing significant relationships within local communities and customers in order to build brand loyalty.


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Table 1: Historical Burkenroad Ratings and Prices

Report Date Stock Price Rating 12 Month Target Price

10/30/15 $34.16 Market Outperform $42.00 11/22/13 $62.72 Market Perform $63.00 11/06/12 $53.95 Market Perform $56.00 11/29/11 $44.05 Market Perform $48.00 11/26/10 $34.61 Market Perform $37.36 12/08/09 $19.85 Market Perform $22.10 04/11/08 $16.00 Market Outperform $20.36

INVESTMENT THESIS Our team assessed Hibbett Sports with a Market Perform rating. We attribute this rating to a 12-‐month target price of $52. The Company’s future growth can be attributed to its expanding store operations, satisfying customer experience, and investments in human capital. Considering these factors, Hibbett appears to possess significant upside potential. Hibbett’s Strategy of focusing on smaller, less-‐served markets has certainly worked Hibbett’s strategy involves targeting isolated markets with less competition. As such, the Company is currently undergoing a clustered expansion program. Under this program, Hibbett aims to open new stores within two hours driving distance of existing stores (see Figure 2). By targeting smaller communities, avoiding congested urban regions, and expanding in a clustered method, Hibbett achieves greater marketing success, larger economies of scale, and decreasing costs per store. Furthermore, suburban and rural markets result in lower corporate, logistical, and operational expenses. Hibbett also combats low customer frequency by locating stores near strip centers and super stores like Walmart.

Figure 2: Hibbett Store Map by State

Source: Hibbett’s Roadshow Presentation


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Productivity Improvements help achieve a better customer experience Hibbett’s management capitalizes on its customer base by choosing different products lines for different communities. The Company offers regional team and college inspired apparel and sports gear. Additionally, the sports gear offered is based on the weather conditions and fields in the area. With products correlated to community needs and wants, Hibbett’s customers find a highly satisfying customer experience. After management creates a product line, it maintains relevant product offerings through high-‐tech information systems. These systems help record customer data and decipher trends in the market so Hibbett is always selling exactly what the customer wants. Growing in contiguous markets adds to distribution efficiency and lower cost All of Hibbett’s merchandise is shipped and received from a single wholesale and logistics facility in Alabaster, Alabama. This centralized distribution facility allows Hibbett to maintain low operating costs, as well as to use third-‐party logistic providers to help it gain efficiencies by 25% at their outlying stores. The Company’s logistic and wholesale facility is designed with automation and to ensure efficiency and lower costs. E-‐commerce will contribute towards increased sales Hibbett’s primary revenue source will continue to be from brick and mortar stores; however, a growing and more developed website should lead to significant revenue generation. E-‐commerce is an integral section of Hibbett’s omni-‐channel initiative with a strategy of engaging the consumer in multiple platforms. Growth in Hibbett’s e-‐commerce sales, which currently represents only 5% of Company sales, could potentially lead to more accurate information systems. Ultimately, the increase in technology and implementation of the omni-‐channel initiative will create a more individualized customer experience which will, in turn, lead to higher customer satisfaction. Superior customer service through invested human capital leads to brand loyalty The final piece in Hibbett’s strategy is carrying out exceptional customer service. Sales associates are trained and specialized in sporting goods products. As a result, employees are able to effectively manage customers’ needs and provide assistance throughout their visit. This further enhances the customer experience and builds strong brand loyalty to Hibbett.


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VALUATION

Hibbett’s Stock price is $44.53 as of November 16, 2016. We calculated a 12-‐month target price of $51 for Hibbett using the discounted cash flow (DCF) and relative multiple methods (See figure 3).

Figure 3: Hibbett’s Current Stock Price and 12-‐Month Target Price

Source: Burkenroad Valuation

Discounted Cash Flow

A large component of Hibbett’s performance is based on the amount of square footage their stores cover. As such, we forecasted revenue using a quantity and price method based on revenue per square foot. In projecting total square footage, we estimated a growth rate in stores using both historical figures and management projections.

Other notable figures we used to discount free cash flows to the firm are the risk free rate, market risk premium, and Hibbett’s beta, all of which we found on Bloomberg. In order to calculate the weighted average cost of capital (WACC), we used the capital asset pricing model, as the Company has no debt. We then assumed a liquidity premium to further discount the cash flows. Finally, we assumed a terminal growth rate of 3%. Discounting the next ten years’ free cash flows and terminal value to present value, we calculated Hibbett having a target price of $51.

$20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00

DCF P/E 15X P/BV 3.16X

12-‐Month Target Price: $52.00

Current Price: $44.53


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Relative Multiple Methods

In our analysis, we also used two relative multiples: price to equity (P/E) and price to book value (P/BV). When looking at Hibbett’s peers to calculate multiple values, we used historical figures from Dick’s, Cabela’s, Footlocker, and Genesco. We found an industry average P/E ratio of 15x and when applied to Hibbett, we calculated a target price of $54. We found an industry average P/BV of 3.16 and when applied to Hibbett, we calculated a target price of $51. After analyzing all three calculated prices, we decided on a 12-‐month target price of $51. INDUSTRY ANALYSIS Hibbett Sports, Inc. operates in the sporting goods store industry. The sporting goods industry is highly fragmented with no single company controlling more than 17% of the total market share. In recent years the industry has experienced more competition from e-‐commerce, specialty stores, and mass merchandisers. The introduction of these new competitors has led to a more fragmented market as well as a price-‐based competition environment. According to the American College of Sports Medicine, alternative exercise methods, such as yoga and pilates, are expected to drive industry revenue growth in the coming years. This is due to the growing health consciousness of middle aged and elderly Americans. These individuals are expected to participate in low intensity exercises such as swimming, yoga, and bowling which will stimulate sales of both apparel and sports equipment for these exercises. Additionally, team sport participation is expected to rise by 1% in the next five years. Current state of the industry and changing cultural trends have presented a number of challenges for Hibbett’s management. Hibbett primarily focuses on selling quality, brand name merchandise such as Nike, Adidas, and Oakley. The growing presence of online retailers, such as Amazon, and mass merchandisers, such as Walmart and Target, have forced Hibbett to lower its prices to remain competitive. Additionally, Hibbett has been slow to respond to the increasing importance of e-‐commerce, as online sales represent just 5% of total revenue. This is in stark contrast with competitors such as Dick’s Sporting Goods and Academy Sports. Individuals, specifically those aged 7-‐17, are choosing to participate in more leisure activities than sporting activities in recent years. Individuals aged 7-‐17 participated in slightly fewer team sports. This can be attributed to a number of factors but one of the primary reasons is the growing video gaming industry. As these games become more advanced and interactive, individuals are choosing to spend their time playing these games as opposed to participating in exercises or team sports (IBIS World).


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Industry State

The sporting goods industry is currently consolidating and experiencing low revenue volatility, low revenue growth, and high competition. These factors are indicative of an industry in the mature lifecycle stage. The high number of consolidations has allowed some retailers to bypass sporting wholesalers and reduce overall costs. Additionally, as more competition has entered the industry, retailers have started to pursue exclusive deals with both wholesalers and manufactures in order to limit availability of products and drive their brands. Sporting goods stores have begun to focus on apparel and footwear in recent years, as these high margin products have grown in popularity. Apparel sales have been spurred by the increased sports participation among women as well as sport-‐specific apparel such as tennis shorts and golf shirts. Developing Health Consciousness According to IBIS World, individuals are expected to participate in more exercise and team sports in the coming years due to the increased health consciousness of the population. Individuals aged 18-‐44 have been growing more health conscious in recent years as they engage in physical activities such as camping and fishing. This group presents two opportunities to the sporting goods industry. The primary opportunity is this groups’ increasing demand for sports apparel and footwear. According to IBIS World, this group is expected to comprise 42.5% of industry revenue in 2016. Additionally, many individuals in this age group have children. As more schools no longer require fitness classes, these parents are emphasizing physical activities for both themselves and their children. These activities often include fishing and camping which suggests that the parents will become more active as their children get older (IBIS World). One major concern is that 17% of children and adolescents are obese. This is a historically high number and it provides a counterbalance towards the overall growing health consciousness environment. Key Success Factors

Due to the fragmented nature of the sporting goods industry, companies must be efficient with their resources and maximize revenue opportunities through marketing, product selection, and market control. Hibbett attempts to maximize its revenue by offering products that are regionally favored, such as Atlanta Braves and Crimson Tide apparel in Georgia and Alabama. Another key success factor is location in key markets. High foot and vehicle traffic correlates with increased revenue. Hibbett, with its emphasis on small and medium sized markets, is limited in its ability to generate high traffic. Other key success factors are disposable personal income (DPI), consumer confidence, and gross domestic product (GDP). As disposable income rises, individuals can purchase more luxury items such as sports apparel, footwear and sports equipment. This is particularly important to Hibbett as its products are generally more expensive than those products offered by mass merchandisers. Additionally, as gross domestic product grows, consumer confidence grows and this makes it more likely that individuals will spend money on more expensive, higher quality items.


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Growing E-‐Commerce A major development in general retailing is the tremendous growth e-‐commerce has played in sales. In fact, sporting goods retailers have developed their own websites to connect with customers at home. The emergence of online sales has not only increased competition between sporting goods stores, but online sales has allowed general retailers and athletic brands to enter the market. Online distributors and merchandisers, like Nike, are able to sell directly to customers. This access to customers allows online distributors and merchandisers to cut out retail stores such as Hibbett Sports. In fact, Nike’s annual online sales, totaling over $1 billion, now amount to more than Hibbett’s total sales. To fight this growing trend, sporting goods retailers are relying on the consumer's’ desire to test equipment or ask a specialist for assistance. Availability of Substitutes Sporting goods are not difficult to purchase. Consumers can look to alternatives such as department stores, big-‐box retailers, and online distributors. Online distributors pose a significant threat as popularity grows and prices drop. Currently, Hibbett has only about 5% of its sales online. Hibbett’s major draw is the knowledge employees can provide on specific sports equipment, coupled with the understanding of what best matches the needs of the community where customers are located. For example, sales associates will know which cleats perform best on the local high school's field. Bargaining Power of Suppliers

In order to maintain high-‐quality merchandise, sporting goods stores are reliant on a few top brands to supply products. The sporting goods industry is primarily brand name driven. As such, over 70% of Hibbett’s inventory purchases can be attributed to three vendors. This heavy reliance on a few vendors gives suppliers significant bargaining power over sporting goods retailers. This dependence on few vendors requires small and mid-‐sized sporting goods stores to maintain strong and stable relationships with these vendors. Bargaining Power of Buyers

As a sporting goods store that sells directly to the end user, Hibbett has no major single customer. Consumers are able to gain their small bargaining power through their ability to purchase products from alternative stores. Hibbett must be constantly aware of competitors’ prices; however, due to the Company’s investment in employee knowledge in training and product knowledge, consumers are less price sensitive than competitors.


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Threat of Entry The high initial costs to entering the sporting goods industry make up a large portion the barriers to entry. These costs include the building, inventory to fill a retail store, and cost of training employees. A new entrant would likely need to spend additional capital on marketing expenses in order to compete against the well-‐established sporting goods stores. Furthermore, a new entrant would require a line of credit. Retailers use lines of credit to purchase inventories and cover other short-‐term operating expenses. Additionally, retail is a relatively unregulated industry with very few competitive advantages other than capital. For these reasons, the threat of entry in the sporting goods industry is moderate. Competitive Rivalry The retail sporting goods industry is increasingly competitive. This has directly led to decreasing prices and aggressive marketing campaigns. Firms compete primarily on price but also battle over service, quality and range of products, and knowledge of the communities. A consequence of this stiff competition is consolidation and a sharp rise in acquisitions. Companies are focusing on decreasing costs, increasing efficiency, and gaining market share.

ABOUT HIBBETT Hibbett Sports Inc. is a sporting goods retail operator headquartered in Birmingham, Alabama. Hibbett Sports focuses on the small to mid-‐sized markets. The Company also targets the Mid-‐Atlantic, Midwest, and Southern regions of the U.S. In 1945, Hibbett Sports opened a single location in Florence, Alabama that sold athletic, marine and small aircraft equipment. In 1960, Hibbett decided to focus primarily on sporting goods merchandise. Mickey Newsome was soon hired as Chief Executive Officer, and he helped expand Hibbett Sports Inc. from 12 stores to 79 stores, eventually taking the Company public in October of 1996. As of January 2016, Hibbett Sports operated 1,044 retail stores in 33 states of the U.S. Hibbett Sports stores account for 98% of the Company’s locations, while the other 2% are smaller-‐format sports athletic shoe stores (see figure 4).


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Figure 4: Hibbett Sports Inc. Store Location by State

Products Hibbett provides an array of quality name brand footwear, apparel, and athletic equipment at an economical price point with a full service environment. The Company emphasizes the importance of providing local products. For fiscal year 2016, Hibbett generated 49% of net sales from footwear, 29% from apparel, and 22% from equipment. Competitive Advantage Hibbett’s competitive advantage is derived from six key factors: Logistics-‐ All of Hibbett’s merchandise is shipped and received from a single wholesale and logistics facility in Alabaster, Alabama. This centralized distribution facility allows Hibbett to maintain low operating costs, as well as to use third-‐party logistic providers to help it gain efficiencies by 25% at their outlying stores. The Company’s logistic and wholesale facility is designed with automation and operational efficiencies. All of these aspects play a key role in Hibbett Sports expansion strategy. Small Market Focus-‐ Hibbett Sports targets small communities that range in population from 25,000 to 100,000 residents. The Company’s strong focus on regional markets has resulted in reduced corporate expenses, lower logistic costs, and increased economies of scale from marketing activities. Store Concepts-‐ Hibbett Sports’ retail format is approximately 5,000 square feet per store, with locations near a highly populated Walmart store. About 80% of all Hibbett Sports stores are located in strip centers which allow greater access for consumers.


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Merchandise-‐ Hibbett provides quality, brand name merchandise at an economical price that is lower than its competitors. Although Hibbett stocks a mostly identical general inventory within its locations, the Company often caters to local and regional communities through inclusion of event and community specific offerings. Customer Service-‐ Hibbett Sports is known for its superior customer service at every location. Hibbett Sports provides customers in different communities with extensive knowledge on mainstream products, as well as the regionally targeted products that the Company offers to different communities. Because of its competitive industry, Hibbett offers a personalized customer experience that affords the Company a competitive advantage over its peers. This aspect of the Company is a core value that has driven success day in and day out. Information Systems-‐ Over the past few years, Hibbett has invested in information systems that are flexible enough to meet the needs of each store location. These systems assist in financial control, cost management, inventory control, merchandise planning, logistics, replenishment, and product allocation. Corporate Expansion Strategy Top executives at Hibbett Sports are implementing two main strategies, which they hope can help expedite growth. The first strategy primarily focuses on opening new stores within 120 miles of an existing Hibbett location. The second strategy involves investing in infrastructure to reach customers through digital commerce. Recent Developments In order to satisfy the strategies for corporate expansion, Hibbett Sports has implemented an upgrade to its point-‐of-‐sale (POS) system, which allows the Company to gain inventory visibility across all stores and allow store-‐to-‐store transfers to complete a customer sale. This new POS system will allow Hibbett Sports employees to provide a better customer experience, which will layer onto the Company’s current superb customer service. In addition to the upgrade of the POS system, Hibbett Sports will implement a new Customer Relationship Management (CRM) capability that improves its ability to communicate and market to its loyal customers. This CRM software will also allow the Company to enable a store-‐to-‐home capability, which allows Hibbett’s chain-‐wide inventory to be shipped directly to a customer’s home. The addition will help retain the Company’s five million loyalty members who are enrolled in a MVP rewards program. The goal is to have these systems provide a better customer experience, which in turn will gain more loyalty members following a positive experience. Recent 2016 figures show that Hibbett Sports added 56 stores between the fourth quarters of 2015 and 2016. This increase in stores has caused net sales to increase 2.6%, from $239.3 million to $245.7 million from the fourth quarter of 2015 to the fourth quarter of 2016.


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PEER ANALYSIS

Hibbett Sports, Inc. has many established peers active in the sporting goods retail industry. Its peers include Dick’s Sporting Goods Inc., Big 5 Sporting Goods Corporation, Cabela’s Incorporated, and Academy Sports + Outdoors. It is important to note that a former peer, The privately-‐owned Sports Authority, filed for bankruptcy earlier in the year and its brand was acquired by Dick’s.

Table 2: Hibbett’s Peers

Company Hibbett Dick’s Big 5 Cabela’s

Symbol HIBB DKS BGFV CAB

Market Cap 972M 7.04B 318M 3.53B

P/E 13.64 21.58 2.85 0.83

EPS 3.05 2.85 0.52 2.64

Beta 1.05 0.83 0.52 0.97

ROE 22.19% 18.25% 7.77% 10.39%

Operating CF 58.80M 643.00M 16.40M 177.22M

Source: Google Finance September 22, 2016

Dick’s Sporting Goods, Inc.(DKS/NYSE) Dick’s Sporting Goods, Inc., is one of the largest players in the sporting goods market. Dick’s was founded in 1948 and is currently headquartered in Coraopolis, Pennsylvania. It has a market capitalization of $6.94 billion and operates in all 50 states. Dick’s primary operations consist of sales in equipment, apparel, footwear, and other sports accessories. Additionally, it has subsidiaries in a range of specialty sports stores.

Big 5 Sporting Goods Corporation (BGFV/NASDAQ) Big 5 Sporting Goods is a major player in sporting goods retail for Western America. The company currently operates approximately 440 stores in over ten different states. Big 5 operates as a retailer for big merchandising brands as well as selling private merchandise under its various trademarks. The company also sells merchandise, specialty sports equipment, and footwear through its online platform. Compared to the industry, Big 5 stores are significantly smaller than the competition, averaging 11,000 square feet per store. However, Big 5 is known for its diverse range of brands throughout its stores. Cabela’s Incorporated (NYSE: CAB) Cabela’s Incorporated is a specialty outdoor activities retailer made up of three business segments. Headquartered in Sidney, Nebraska, Cabela’s operates 77 retail stores in the U.S. and Canada. Its two primary forms of revenue generation consist of the retail and the direct.


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The retail segment consists of in-‐stores sales while the direct segment is composed of e-‐commerce and mail catalogs. Both segments sell primarily outdoor apparel, equipment, footwear, and technology. The third business segment performed by Cabela’s is Financial Services. This segment offers credit cards and other financing options. Academy Sports + Outdoors (Private) Academy Sports + Outdoors is one of the largest private retailers. Academy operates approximately 200 stores in over 15 states with $4.6 billion in revenue throughout the south and southwest. Operations primarily consist of sports, outdoor activities, and lifestyle products. In August 2011, Academy Sports + Outdoors was acquired by Kohlberg Kravis Roberts & Co L.P., a private equity firm. Academy emphasizes, convenience, quality, and service throughout the customer experience. MANAGEMENT PERFORMANCE AND BACKGROUND

Hibbett Sports, Inc.’s top level management has significant experience and knowledge of the sporting goods industry which allows for continued growth of the Company. Jeffry O. Rosenthal Chief Executive Officer, President (58) Jeffry Rosenthal is currently Hibbett’s Chief Executive Officer (CEO) as well as President and Chief Operating Officer (COO). He was promoted from Vice President of Merchandising to the duties of CEO in 2010 and has retained that position to date. Mr. Rosenthal has served as President and and COO since 2009. In 2014, Mr. Rosenthal was nominated for CEO of the year by the Alabama Retail Association. He was awarded the Silver award, which recognizes the CEO that reaches annual sales of more than $20 million. Mr. Rosenthal previously worked for a sporting goods company named Champs Sports, where he held the position of Vice President of Divisional Merchandise (DMM) for apparel from 1981 to 1998. Scott J. Bowman Senior Vice President, Chief Financial Officer, Principal Accounting Officer (49) Scott Bowman has been Hibbett’s Chief Financial Officer and Senior Vice President since July 2012. Mr. Bowman’s expertise comes from his work as a financial leader of a 795 store division that represented $25 billion in annual sales. Prior to joining Hibbett Sports, Mr. Bowman served as Home Depot’s Division Chief Financial Officer for three years. Cathy E. Pryor Senior Vice President of Operations (53) Cathy Pryor has been with Hibbett Sports since 1988 where she served as a District Manager and Director of Store Operations. From 1995 to 2012, Ms. Pryor was the Vice President of Operations and eventually earned the title of Senior Vice President of Operations.


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Jared S. Briskin Senior Vice President and Chief Merchant (43) Jared Briskin was named Senior Vice President and Chief Merchant at Hibbett Sports in 2014. Before then, he served as the Vice President of Apparel and Equipment at Hibbett Sports from 2004 to 2010. In 2010, he was promoted to Vice President of Footwear and Equipment. He retained that position until his 2014 promotion to Senior Vice President and Chief Merchant. Michael J. Newsome Non Executive Chairman of the Board (75) Michael Newsome is currently a non-‐independent Director of Hibbett’s Board and has been a member since 1996. In 1981, Mr. Newsome was the President of Hibbett Sports and in 1999 he was named the Chief Executive Officer. In 2004, he was named as the Chairman of the Board. Mr. Newsome held his positions until 2010. In 2014, Mr. Newsome resigned from his executive management positions to serve as the Chairman of the Board. In 2007 the National Sporting Goods Association inducted Mr. Newsome into the Sporting Goods Industry Hall of Fame. Mr. Newsome had a pivotal role in the transformation of Hibbett Sports from a small privately owned retailer to the successful public company it is today. Return on Invested Capital (ROIC) Return on invested capital (ROIC) measures the Company’s ability to generate cash flows relative to their invested capital. This measurement allows investors to view how well a company uses its own money to generate returns. Table 3 shows the five year ROIC of Hibbett Sports and their comparable companies. Hibbett Sports Inc. has a higher ROIC for every year as compared to the peer average.

Table 3: Return on Invested Capital

Company Ticker 2015 2014 2013 2012 2011

Hibbett Sports Inc. HIBB 22.01% 23.33% 25.86% 32.46% 28.98%

Dick’s Sporting Goods Inc. DKS 18.33% 19.57% 20.56% -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐ 16.56%

Big 5 Sporting Goods Corporation BGFV 6.32% 6.38% 12.38% 7.41% 6.24%

Cabela’s Incorporated CAB 3.29% 4.20% 5.75% 5.15% 4.70%

Peer Average 9.31% 10.05% 12.90% 6.28% 9.17%

Source: Thomson One September 22, 2016


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Management Compensation Hibbett Sports’ Management compensation panel has an extensive procedure when setting goals and guidelines to motivate its executive officers to improve performance from past years. This panel is specifically responsible for managing the guidelines for the compensation program as well as managing equity bonuses for executive officers. Factors considered include performance-‐based cash bonuses, performance based equity awards, and base salary. The panel warrants competitive compensation by evaluating a group of equally qualified executives from 22 peer companies. The executive’s compensation correlates with the progress of the Company as well as making sure the executives are always doing what is best for the shareholders. The program ensures that equity awards and cash bonuses account for a higher portion of the total compensation to keep these executives motivated for the right reasons. Each executive position payment is calculated individually, which takes into account factors such as the responsibility of the executive officer, tenure, performance, and the amount of Company stated goals achieved. Overall compensation is evaluated by Hibbett Sports performance goal and earnings before interest and taxes (EBIT), which is found in Table 4. The Compensation Panel’s idea of “pay for performance” allows named executive officers (NEOs) to receive annual cash bonuses based on the Company’s targeted EBIT. Table 4 shows the relationship between NEO’s percentage earning of performance bonuses and the Company’s EBIT goal for the fiscal years of 2014, 2015 and 2016, respectively.

Table 4: Estimated Bonuses according to EBIT Goal Attained

% of Company Performance Goal Attained

% of Executive’s Performance Bonus

Earned

Below 85.0% 0.0%

85.0% 62.5%

90.0% 75.0%

95.0% 87.5%

100.0% 100.0%

105.0% 112.5%

110.0% 125.0%

115.0% 137.5%

120.0% or above 150.0%

Source: Hibbett Sports Proxy Statement Fiscal Year 2016


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Table 5 shows the past three fiscal years of how percentage payout for NEOs is affected by the Company’s EBIT:

Table 5: Annual EBIT Goals and Achievements EBIT Goal EBIT Achieved % of Goal Achieved % of Payout

Fiscal 2016 $123.0 Million $110.1 Million 89.0% 72.5%



Source: Hibbett Sports Proxy Statement Fiscal Year 2016 SHAREHOLDER ANALYSIS As of September 21, 2016, Hibbett Sports Inc. had 21,987,475 shares outstanding with a free float of 21,748,644. Additionally, Hibbett had 436 shareholders, of which the ten largest are from the U.S. (see Table 6). Fidelity Management & Research Company remains the largest stakeholder owning 15.30% of shares outstanding. TimesSquareCapital became a new investor this calendar year and now owns 5.78% of shares outstanding. In the last three months, Times Square Capital has increased its stake in the Company by purchasing 429,850 common shares outstanding. Hibbett’s shares are primarily controlled by the top ten shareholders. These shareholders own 69.85% of shares outstanding and all except Arrowpoint Asset Management, LLC have a low turnover rate. This low turnover rate keeps Hibbett’s stock stable and active with a three month average daily trading volume of 393,780 shares.

Table 6: Hibbett’s Largest Shareholders Holder Name % O/S Shares Held % Change (YTD) Fidelity Management & Research Company 15.30 3,363,207 (6.23) BlackRock Institutional Trust Company, N.A. 9.41 2,068,044 1.66 Arrowpoint Asset Management, LLC 8.47 1,861,518 39.17 The Vanguard Group, Inc. 8.23 1,808,753 (0.36) Neuber Berman, LLC 6.92 1,521,530 (6.46) TimesSquare Capital Management, LLC 5.78 1,270,150 100 Epoch Investment Partners, Inc. 4.75 1,045,343 6.22 ClearBridge Investments, LLC 3.90 858,284 (3.73) GW&K Investment Management 3.71 815,472 (0.54) Champlain Investment Partners, LLC 3.38 743,005 (13.38) Total 69.85 15,355,306

Source: Thompson One September, 21 2016


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Stock Repurchase Program

Hibbett has not historically issued dividends and does not plan to do so in the coming years. Instead, the Company has a history of repurchasing stocks. In November 2012, the Board of Directors authorized a $250 million Stock Repurchase Program. In November 2015, this authorization was replaced by a new Stock Repurchase Plan. This program authorized the repurchase of $300 million common stocks through February 2, 2019. During the 13 weeks ended July 30, 2016, Hibbett repurchased 620,455 shares of common stock at a cost of $27.9 million. As of July 30, 2016, Hibbett had approximately $271.2 million remaining under the Stock Repurchase Program. RISK ANALYSIS AND INVESTMENT CAVEATS Hibbett’s future success is challenged by multiple risks. These risk affect management strategies and could potentially limit growth. Hibbett’s risk can be broken into two main groups: Operational Risk and Financial and Governmental Risk. Many of these risks can be attributed to the retail sporting goods industry; however, others are unique to Hibbett because of its size, location, and strategic position. Operational Risk Economic Hibbett’s sales primarily come from customers’ discretionary spending. This dependence on discretionary spending makes Hibbett susceptible to economic factors such as interest rates, inflation, housing, prices, and taxes. Many of the economic risks are outside of Hibbett’s control and, therefore, cannot be completely mitigated. Any major disruption in the U.S. economy or financial markets would likely lead to decreased sales as well as smaller profit margins. Seasonality Similar to other retailers, Hibbett faces seasonal fluctuations in revenue. Due to holiday buying patterns, the Company consistently records its highest sales in the first and fourth quarters. Specifically, customers increase purchasing directly before the December holidays. First quarter sales are credited to New Year’s resolutions to get in shape and, thus, purchase workout gear and equipment. An economic decline during either of these periods would likely adversely affect the Company’s earnings to a greater extent than if a downturned occurred during the second or third quarter of the year. Additionally, merchandising apparel can lead to an increase in sales if a regional team has a successful sports season. Along the same lines, if a team is underperforming, apparel sales can be significantly lower than average. Furthermore, any trends or new products can cause temporary spikes in sales.


18

Vendors Hibbett relies on a select number of key vendors to supply its products. This selection process is a direct result of customers preferring top brands. As such, Hibbett is dependent on maintaining strong relationships with its major vendors and manufacturers. In fact, Hibbett’s top three vendors account for over 70% of products purchased. A major risk would be any conflict in these relationships. If such a conflict were to occur, Hibbett would experience operational declines as they search for new vendors. If the new vendors were not of the same quality as the existing vendors, these operational declines could persist into the future. Furthermore, when a product is limited by supply rather than demand, a vendor’s allocation of products among retailers plays a major role in sales. Continuing a strong relationships with its vendors will give Hibbett an advantage on new product launches and will help Hibbett keep pace with market trends. Imported Goods Most of Hibbett’s vendors produce and import a large majority of products from foreign countries. These imported goods are less expensive than domestically made products and contribute positively to Hibbett’s profit margins. If imported goods increase in price or become unavailable, the Company’s profit margins would suffer significantly. Additionally, the domestic products used to supplement the foreign products may be of a lesser quality than those our vendors currently import. Additional risks associated with the Company’s reliance on imported goods include, but are not limited to, raw materials shortages, problems with oceanic shipping, international disputes, rising commodity prices, and trade restrictions. Additionally, if a vendor is associated with questionable labor practices, it could negatively affect the public’s perception of Hibbett. Information Systems Hibbett claims in its most recent 10-‐k that the operation of its business is dependent on the successful integration and operation of its information systems. Hibbett uses its information system to manage sales, logistics, merchandise planning, and to select the optimal inventory amounts for its stores. Hibbett attempts to control the risk of business interruptions through control protocols and a disaster recovery plan. The Company primarily uses third-‐party service providers for certain system applications. A disruption or failure by these service providers in the form of inadequate encryption, data separation, or technical problems could negatively affect Hibbett’s business. Additionally, Hibbett does not have the necessary technology to support all of its current information needs and rely on third-‐party service providers for specific software and applications. Furthermore, Hibbett’s insufficient focus on technology infrastructure leaves it vulnerable to technological and human capital losses. The Company’s inability to invest in the current technology and replace obsolete equipment pose long-‐term threats to Hibbett’s growth.


19

Financial and Governmental Risks Uninsured Assets Hibbett manages cash and cash equivalents beyond federally insured limits. Additionally, Hibbett purchases investments that are not guaranteed by the Federal Deposit Insurance Corporation. This creates the risk that Hibbett may not recover the full principal of its investments as well as the risk that its future liquidity may be diminished. In an attempt to combat this risk, Hibbett practices an investment policy that emphasizes preservation of principal and liquidity. Significant Stockholders As a publicly traded Company, Hibbett is vulnerable to attempts by significant stockholders attempting to take control over or influence the Company. This action could adversely affect Hibbett’s operation and financial health. Responding to stockholder actions and motions is both time consuming and costly. Additionally, it forces the Board of Directors and senior management to step away from its daily operation of the business. Labor Unions Hibbett cannot be certain that it will always avoid pressure from labor unions or labor union campaigns. This risk could grow if federal legislation or regulatory changes facilitate union organization and development. If this risk materialized, Hibbett would be forced to negotiate wages, salaries, and benefits with its employees. This could negatively affect operations by increasing Hibbett’s overall cost to operate. Hibbett believes that it can mitigate some of this risk by maintaining strong relationships with its employees.

FINANCIAL PERFORMANCE AND PROJECTIONS

Our 12-‐month price projection for Hibbett Sports is $52 with a Market Perform rating.

To calculate revenue, our team used the quantity and price method. To use this model, our team looked at historical revenue per square foot as well as historical growth in square footage. Historically, Hibbett has generated revenue of between $0.18 and $0.20 per square foot. However, Hibbett Sports revenue per square foot is seasonal as the first and fourth quarters generate the most revenue per square foot out of the four quarters. Our team used historical store growth as well as discussions with management to forecast store growth of between 3% and 5% a year for the next few years.

This projected growth is from two main sources. The growth in revenue is attributable to two main sources. First, is the planned expansion into new states such as California. This will increase the number of stores as well as revenue. The second source of revenue growth is the growth of Hibbett’s online sales. This will increase the amount of revenue per square foot as well as overall sales. Some key assumptions we made are that Hibbett will maintain its moderate growth strategy by avoiding acquisitions and by avoiding taking on excessive amounts of debt in order to increase the growth of the Company. Additionally, we assumed that Hibbett’s revenue per square foot will remain similar to historical trends.


20

To calculate costs, our team looked at Hibbett’s historical costs such as costs of goods sold, selling, general and administrative and depreciation costs. Historically, these costs have represented around 65%, 21% and 2%, respectively. Management did not expect this cost structure to change dramatically in the future. Some short-‐term costs due to the implementation of the omni-‐channel system are expected but these costs are not expected to be long term expenses.

The Company’s Stock Repurchase Plan is one considerable use of cash that our team forecasts will end soon. We expect the stock repurchases to end sometime in the 2018 fiscal year. Carrying the repurchases any further could potentially turn cash flow negative as the Company has historically avoided debt due to its preference for a strong balance sheet. SITE VISIT Our team of four flew out on the morning of October 28 to Birmingham, Alabama where Hibbett Sports is headquartered. Upon arrival we were escorted to the boardroom where we met with the Jeffry Rosenthal (Chief Executive Officer), Scott Bowman (Senior Vice President and Chief Financial Officer) and Cathy Pryor (Senior Vice President of Operations). We began the site visit with a question and answer session. Mr. Rosenthal focused a great deal on the new Omni-‐Channel initiative, which will provide a better experience for customers. He had mentioned the efforts they were going through to activate their e-‐commerce plans, which he had hoped to occupy 10-‐20% of their revenues once implemented. Mr. Bowman provided details about the costs for building a new store. He provided us with great insight on lease terms for new stores as well as their target goals for how many new stores they wish to open per year. The executives focused a great deal on their brand new store opening in California and their hopes to open 100 new stores in California in the coming years. Ms. Pryor touched on Hibbett’s training systems in place for each new store, as well as how the implementation process works for stores. We asked about the differences in stores and how Hibbett determines markets in which to enter, and we learned that location selection depends on their competition. We touched on Hibbett’s no-‐debt model as well as their investment plans for the future.


21

Each executive had a unique view on the Company and seemed to blend well together, which we thought allowed them to create a successful business model. Our team gained great insight into the future of the Industry, Hibbett’s operations, and the Company’s future plans for continued success in the sporting goods industry.

Site Visit Photo


22

INDEPENDENT OUTSIDE RESEARCH Our team had the opportunity to visit a local Hibbett Sports in New Orleans. We knew that actually visiting a local Hibbett Sports location would be the best way to test Hibbett’s outstanding service and selection claims. Hibbett Sports has two locations in the greater New Orleans area and we decided to go to the store located in the Lakewood area to evaluate the shopping experience. Entering Hibbett was a crucial step in understanding the Company’s direction because it was our first look at the store layout. Since the majority of Hibbett Sports stores are 5,000 Sq. ft. this visual gave us a good representation of what other stores look like. We noticed how the aspect of implementing a 5,000 Sq. ft. store plan for each store was beneficial because the customer has a full view of every product offered in store. In turn, this perspective could lead customers to purchase more than one item. After walking throughout the store, we recognized almost every brand name, which confirmed our expectation that Hibbett is stocked with the top tier brands and high quality merchandise. Another aspect of the 5,000 sq. ft. store was that it made it easy on the consumer to ask for help by having employees covering the limited space. Employees were able to provide enough space to consumers so they felt no pressure to purchase an item, yet the consumer also never had to wait for help if needed. In our site visit to the store, we could see how the 5,000 sq. ft. store format was mutually beneficial for both consumer and employee. In the store we decided to shop for basketball shoes, because two of the team members were strong enthusiasts of the sport and knew basketball shoes well. Our goal was to judge the customer service that the employees would provide to us. At the time of arrival to the store there were only two employees working, which seemed to be a small number of employees for a 5,000 Sq. ft. store. But, as we spent more time in the store, we realized that both employees were moving around the store efficiently and helping customers in a timely fashion. As we found our way over to the basketball shoe section, we noticed they offered a wide variety. As we were looking over the shoes, an employee came over to ask us if we needed help. We mentioned we were looking for a basketball shoe that had great comfort on court, but could also be worn as a lifestyle sneaker off the court. She immediately found a newly released Nike shoe. She offered her reasoning as to why the shoe was great for on court, and also explained why you could wear this as a lifestyle sneaker. In addition to finding a shoe that satisfied our criteria, she advised us to get the shoe one size bigger based on her experience. We were impressed with her knowledge of shoes and Hibbett’s overall shoe line.


23

As our other team members were looking around the store, they met Troy, the Assistant Manager of the store. He happily guided them to find the exact item they were searching for in the store and he asked if they were in need of any other products. One team member said he was looking for the newest Nike lifestyle shoe release that had come out earlier in the day. Troy told our team member that they were sold out of the item and continued to explain the process of inventory for each store to the group. This led to the high point of our experience at Hibbett Sports because Troy proceeded to have a 45 minute conversation with one of our team members about all of the new and old shoe releases, as well as discussing Troy’s personal interests. Our group truly saw the passion and knowledge Troy had for shoes and how proud he was to be an Assistant Manager at this Hibbett Sports location. Troy’s politeness and helpfulness exceeded our expectations for Hibbett’s customer service and it is clear why this Company retains so many loyal customers. Overall, our surprise visit to the local Hibbett Sports not only confirmed, but exceeded, our expectations for merchandise, staff knowledge, and customer service. Though our interactions with Hibbett’s employees, it was evident how focused Hibbett is on properly training its employees. Competition: Dick’s Sporting Goods On our site visit to Dick’s Sporting Goods, we noticed that it was a very large store compared to Hibbett Sports. The large store size made it difficult to determine where products were located. We found our way over to the Basketball shoe section, but found no help in sight. We saw they had most of the up to date shoe releases and latest technology, but we were not able to get any information about the products. We stood around for a minute or two had to go over to another department of the store to ask for help. The employee had mentioned to us that they have to call the specific employee due to the fact that each employee works only in their department. Once we found this out about Dick’s Sporting Goods, it was clear that the Hibbett Sports had a clear competitive advantage by having well rounded and knowledgeable employees compared to their competitors. Big 5 Sporting Goods Unfortunately, we could not do a site visit to Big 5 Sporting Goods store because there were no locations nearby. We conducted research on their website and searched for Men’s Basketball shoes. We judged Big 5 Sporting Goods to have a poor selection due to their lack of brand name merchandise and limited selection. Also, Big 5 did not offer the latest technology advanced basketball shoes to their consumer as well.


24

Conclusion After our site visits and online research, our team concluded that Hibbett Sports has a clear competitive advantage in the shoe market over Dick’s Sporting Goods and Big 5 Sporting Goods. Even though Dick’s Sporting Goods offered the same caliber basketball shoes, they did not provide the customer service that Hibbett offered to customers. Also, Big 5 Sporting Goods did not provide the selection that most consumers are hoping to find. Even though Big 5 may offer a good customer service experience in store, Big 5’s product selection is no match for Hibbett Sports. It was clear that Hibbett Matches its competitors with the high quality products, and thoroughly surpassed competitors in customer service. Analyst Reports Multiple analysts on the Thomson One Database believe that, in order for companies to succeed in this industry, they not only need to have strong sales within the stores, but their e-‐commerce must serve as a key contributor in these sales. We spoke to one analyst who believes that Hibbett Sports has a strong brick and mortar presence in the Sporting Goods Industry that is rapidly growing, but he said that their lack of e-‐commerce is a weaknesses against competitors. Hibbett’s CEO, Jeffry Rosenthal, is aware of their situation and is investing in the proper technology and issuing strategies that will develop a competitive e-‐commerce by 2017. In the future, this analyst believes that Hibbett Sports must have 15-‐20% of the Company’s revenue coming from its website. If it only reaches a target of 10%, which is believed to be too low, Hibbett Sports will risk losing market share. Mr. Rosenthal understands that the e-‐commerce business will not grow overnight, but Hibbett must set the bar high to keep market share and stay highly competitive in the industry.


25

ANOTHER WAY TO LOOK AT IT

ALTMAN Z-‐SCORE In 1968, Dr. Edward Altman developed the Z-‐Score test to determine the risk of a manufacturing company going bankrupt. Over time, his test has been applied to publicly traded companies in all industries. The Altman Z-‐Score is a multiple discriminant analysis that tracks changes in bankruptcy risk over time. To determine the Z-‐Score, one uses the following ratios: working capital/total assets, retained earnings/total assets, EBIT/total assets, market value of equity/book value of total liabilities and sales/total assets. The Z-‐Score separates companies into four different bankruptcy risk classifications. Companies with a Z-‐Score greater than 3.0 are considered to have a very low risk of bankruptcy and is considered by lenders to be a safe investment. A Z-‐Score between 2.7 and 2.99 represents a company that is considered to have a low risk of bankruptcy, but lenders tend to be cautious in this range. A Z-‐Score between 1.8 and 2.7 represents a significant chance that the company may go bankrupt within the next two years. A Z-‐Score below 1.8 signifies a company with a very high risk of bankruptcy within the next two years. Lenders would be extremely wary of investing in this company.

Table 7: Hibbett Sports Altman Z-‐Score Ratio 2009 2010 2011 2012 2013 2014 2015 Multiplier Working Capital to Total Assets

0.455 0.533 0.557 0.565 0.538 0.565 0560 1.2

Retained Earnings to Total Assets

0.898 0.880 0.923 1.113 1.117 1.183 1.251 1.4

EBIT to Total Assets

0.204 0.189 0.234 0.297 0.307 0.273 0.261 3.3

Market Cap to BV of Liabilities

4.000 6.074 8.259 12.246 10.258 14.033 9.444 0.6

Sales to Total Assets

2.310 2.145 2.116 2.336 2.170 2.046 2.019 1.0

Total Altman Z-‐Score

7.276 8.287 9.804 12.900 11.547 13.702 10.969

As shown in Table 7, Hibbett Sports has maintained a Z-‐Score significantly above the 3.0 cut-‐off and is considered a very low risk for bankruptcy. Hibbett’s Z-‐Score decline in 2015 can be attributed to the decrease in market capitalization. That year, the Company’s market capitalization decreased by slightly over $370 million. On all other metrics, Hibbett has almost maintained its position or shown positive growth.


26

PETER LYNCH EARNINGS MULTIPLE VALUATION Peter Lynch, who managed Fidelity Investments’ fund, was known as arguably the greatest mutual fund manager in history. His simple yet effective technique was to compare a company’s stock price to the S&P 500 by using the price to earning ratio of 15x. Peter Lynch was the author of multiple books, but his most famous book “One Up On Wall Street” included investing tips, questions you should ask yourself before investing, and of course details on Lynch’s charting tool that simplified all of his investment choices. Figure 5 shows Hibbett Sports’s closing stock prices for the past five years multiplied by 15. According to Peter Lynch if the stock is traded well below the earnings line he would buy it, and when it rose above the earnings line, he would sell. This technique allowed him to capture enormous amounts of profit. Hibbett’s stock price as of October 27, 2016 is $39.075, which is 12.8x of its earnings. As such, Peter Lynch would purchase the Company’s stock.

Figure 5: Hibbet’s Peter Lynch Chart

Source: Bloomberg Data/ Burkenroad Analysis accessed October 27, 2016

Stock Price

Earnings


27

WWBD? What Would Ben (Graham) Do?

Benjamin Graham is credited as the father of value investing. Graham’s methodology has yielded amazing success. Graham’s value investing methodology revolves around eight hurdles. The hurdles measures how undervalued a company’s stock currently is and its future growth potential. If a given stock passes four of the eight hurdles, Graham’s framework determines the stock is an attractive investment.

Hibbett Sports, Inc. passes five of Graham’s eight hurdles. With a high earnings to price yield, no debt, and a substantial amount of inventory on hand, Hibbett passes hurdles one, five, and six easily. On the contrary, the Company is far from passing hurdles three and four, as Hibbett has never paid dividends to common shareholders and has a stock price of nearly 300% of book value.

According to Ben Graham’s value investing, Hibbett Sports is an attractive investment (see Figure 6).

Figure 6: Ben Graham Diagram


28

Earningspershare(ttm) 2.99$ Price: 39.05$

EarningstoPriceYield 7.65%

10YearTreasury(2X) 3.70%

P/Eratioasof 1/31/16 11.0





CurrentP/ERatio 13.1

Dividendspershare(ttm) -$ Price: 39.05$

DividendYield 0.00%

1/2Yieldon10YearTreasury 0.93%

StockPrice 39.05$

BookValuepershareasof 7/30/16 14.20$

150%ofbookValuepershareasof 7/30/16 21.30$

Interest-bearingdebtasof 7/30/16 -$

Bookvalueasof 7/30/16 318,693$

Currentassetsasof 7/30/16 354,599$

Currentliabilitiesasof 7/30/16 123,096$

Currentratioasof 7/30/16 2.9

EPSforyearended 1/31/12 2.15$






EPSforyearended 1/31/13 2.72$ 27%

EPSforyearended 1/31/14 2.70$ -1%



Stockpricedataasof November16,2016

HIBBETTSPORTSINC.(HIBB)

BenGrahamAnalysis

Hurdle#1:AnEarningstoPriceYieldof2XtheYieldon10YearTreasury

Hurdle#2:AP/ERatioDownto1/2oftheStocksHighestin5Yrs

Yes

Yes

Hurdle#3:ADividendYieldof1/2theYieldon10YearTreasury

Hurdle#4:AStockPricelessthan1.5BV

No

No

No

Hurdle#8:StabilityinGrowthofEarnings

Hurdle#5:TotalDebtlessthanBookValue

Hurdle#6:CurrentRatioofTwoorMore

Hurdle#7:EarningsGrowthof7%orHigheroverpast5years

Yes

Yes

Yes

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2018E

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24,129

22,947

22,442

22,274

21,617

21,617

21,014

21,050

21,081

21,114

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62.8%

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63.6%

64.6%

64.3%

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#sm

aller-fo

rmatstores

-2.35%

927

54

900

946

$

344

$

195

$ -1

.79%

244

$

935

93

910

17

3.82%

988

61

960

951

$

340

$

196

$

0.54%

243

$

375

94

969

19

-4.15%

1.82%

-7.41%

4.35%

15.77%

5.01%

7.82%

9.19%

5.50%

1.69%

5.66%

1,044

1,053

1,059

1,074

1,088

1,088

1,102

1,116

1,130

1,144

1,144

56

9

6

15

14

44

14

14

14

14

56

1,020

1,049

1,056

1,067

1,081

1,068

1,095

1,109

1,123

1,137

1,121

924

$

269

$

196

$

227

$

240

$

928

$

274

$

200

$

226

$

241

$

936

$

326

$

100

$

65$

83$

85$

331

$

102

$

66$

82$

85$

334

$

195

$

51$

50$

48$

50$

198

$

51$

50$

48$

51$

199

$

-2.85%

-0.84%

-0.92%

1.78%

1.20%

0.37%

1.77%

1.95%

-0.49%

0.36%

0.88%

271

$

239

$

277

$

261

$

256

$

256

$

239

$

265

$

266

$

265

$

265

$

449

753

983

804

852

833

860

868

876

883

872

97

98

99

104

109

109

114

119

124

129

129

1,024

1,034

1,040

1,054

1,068

1,068

1,082

1,096

1,110

1,124

1,124

20

19

19

20

20

20

20

20

20

20

20

Totalstores

927

988

1,044

1,053

1,059

1,074

1,088

1,088

1,102

1,116

1,130

1,144

1,144

SquareFeet:

#5000sfstores

#sm

aller-fo

rmat

#largerfo

rmat

Totalsqu

arefeetfo

rallstores

Averagesqu

arefeet

Averagereven

uepersqu

arefoot

Year-to-yearchangeinaveragereven

ueperSF

4,550,000

39,100

4,

589,100

4,467,850

0.19069

$

-1.69%

4,845,000

43,700

4,

888,700

4,751,783

0.19224

$

0.81%

5,120,000

5,170,000

5,200,000

5,270,000

5,340,000

5,340,000

5,410,000

5,480,000

5,550,000

5,620,000

5,620,000

46,000

43,700

43,700

46,000

46,000

46,000

46,000

46,000

46,000

46,000

46,000

5,166,000

5,213,700

5,243,700

5,316,000

5,386,000

5,386,000

5,456,000

5,526,000

5,596,000

5,666,000

5,666,000

5,048,117

5,189,850

5,228,700

5,279,850

5,351,000

5,285,233

5,421,000

5,491,000

5,561,000

5,631,000

5,549,333

0.18682

$

0.05435

$

0.03958

$

0.04591

$

0.04842

$

0.18741

$

0.05531

$

0.04035

$

0.04567

$

0.04857

$

0.18900

$

-2.82%

-0.89%

-1.02%

1.71%

1.15%

0.31%

1.75%

1.95%

-0.51%

0.31%

0.85%

Evolution Pe

troleu

m Corp. (E

PM)

BURK

ENRO

AD REP

ORT

S (w

ww.burkenroa

d.org)

Nov

embe

r 16, 201

6

30

HIBBE

TTSPO

RTSINC.(H

IBB)

Ann

ualand

QuarterlyEarnings

Intho

usands

Forthepe

riod

end

ed

NetSales

Costofgoo

dssold,includ

ingdistribu

tion

cen


Grossprofit

Storeop

erating,selling,and

adm

inistrativeexpe

nses

Dep

reciationandam

ortization

Ope

ratingincome

Interestincome

Interestexpen

se

Interestexpen

se,net

Incomebe

foreprovision

forincometaxes

Provisionforincometaxes

Netearnings

201

4A

851,965

$

542,700

309,265

181,527

13,847

113,891

(11)

199

188

11

3,703

42,826

70,877

$

201

5A

913,486

$

586,702

326,784

192,648

15,990

118,146

(22)

315

293

11

7,853

44,269

73,584

$

201

6A

03-M

ayA

02-AugA

01-NovE

31-JanE

201

7E

02-M

ayE

01-AugE

31-OctE

30-JanE

2018E

943,104

$

282,092

$

206,933

$

242,372

$

259,083

$

990,480

$

299,811

$

221,562

$

253,971

$

273,493

$

1,048,837

$

610,389

177,090

138,676

154,148

167,368

637,282

188,213

148,480

161,526

176,676

674,895

332,715

105,002

68,257

88,223

91,715

353,198

111,597

73,082

92,445

96,816

373,942

203,673

56,061

53,501

52,371

54,642

216,574

58,549

56,540

54,279

58,599

227,967

17,038

4,599

4,638

4,674

4,827

18,739

4,953

5,129

5,278

5,425

20,785

112,004

44,342

10,118

31,178

32,247

117,885

48,095

11,413

32,889

32,792

125,189

(2)

(2)

(4)

(2)

(3)

(2)

(1)

(8)

69

69

69

69

276

69

69

69

69

276

292

65

62

67

67

261

67

66

67

68

268

111,712

44,277

10,056

31,112

32,179

117,624

48,028

11,347

32,822

32,724

124,921

41,184

16,371

3,546

11,622

12,021

43,560

17,941

4,239

12,261

12,224

46,665

70,528

$

27,906

$

6,510

$

19,490

$

20,159

$

74,064

$

30,087

$

7,108

$

20,561

$

20,500

$

78,256

$

2018E

2017E

Basicearningspershare

Dilutedearningspershare

Weightedaveragesharesoutstanding(inthou

sand

s)

Basic

Diluted

SELECT

EDCOMMON-SIZEAMOUNTS

Costofgoo

dssold,includ

ingdistribu

tion

cen


Grossprofit

Storeop

erating,selling,and

adm

inistrativeexpe

nses

2.74

$

2.70

$

25,870

26,266

63.7%

36.3%

21.3%

2.90

$

2.87

$

25,369

25,620

64.2%

35.8%

21.1%

2.95

$

1.23

$

0.29

$

0.88

$

0.94

$

3.45

$

1.44

$

0.34

$

0.98

$

0.98

$

3.75

$

2.92

$

1.22

$

0.29

$

0.87

$

0.93

$

3.43

$

1.43

$

0.34

$

0.98

$

0.97

$

3.71

$

23,947

22,780

22,281

22,104

21,447

21,447

20,844

20,880

20,911

20,944

20,895

24,129

22,947

22,442

22,274

21,617

21,617

21,014

21,050

21,081

21,114

21,065

64.7%

62.8%

67.0%

63.6%

64.6%

64.3%

62.8%

67.0%

63.6%

64.6%

64.3%

35.3%

37.2%

33.0%

36.4%

35.4%

35.7%

37.2%

33.0%

36.4%

35.4%

35.7%

21.6%

19.9%

25.9%

21.6%

21.1%

21.9%

19.5%

25.5%

21.4%

21.4%

21.7%

Ope

ratingincome

13.4%

12.9%

11.9%

15.7%

4.9%

12.9%

12.4%

11.9%

16.0%

5.2%

12.9%

12.0%

11.9%

Incomebe

foreprovision

forincometaxes

13.3%

12.9%

11.8%

15.7%

4.9%

12.8%

12.4%

11.9%

16.0%

5.1%

12.9%

12.0%

11.9%

Netearnings

SELECT

EDYEA

RTO

YEA

RCH

ANGES

NetSales

Costofgoo

dssold,includ

ingdistribu

tion

cen


8.3%

4.06%

4.40%

8.1%

7.22%

8.11%

7.5%

9.9%

3.1%

8.0%

7.8%

7.5%

10.0%

3.2%

8.1%

7.5%

7.5%

3.24%

4.55%

3.85%

6.16%

5.44%

5.02%

6.28%

7.07%

4.79%

5.56%

5.89%

4.04%

4.10%

3.43%

5.62%

4.45%

4.41%

6.28%

7.07%

4.79%

5.56%

5.90%

Storeop

erating,selling,and

adm

inistrativeexpe

nses

6.98%

7.11%

5.47%

4.15%

4.73%

8.80%

1.88%

6.70%

0.11%

3.91%

3.70%

7.36%

5.25%

Incomebe

foreprovision

forincometaxes

-1.82%

3.65%

-5.21%

1.24%

-5.64%

4.43%

16.89%

5.29%

8.47%

12.84%

5.50%

1.69%

6.20%

Netearnings

OTH

ER

Stores(e

ndofp

eriod)

Netincreaseinstores

Averagenum

berofstores

Averagesalesperstore

Averagegrossprofitperstore

Averageope

rating,sellingandadministrativeexpe

nses

Year-to-yearchangeinaveragesalesperstore

Inventorype

rstore

Capitalexpen

ditures/ne

tincreaseinstores

PPEpe

rstore

StoreDetail

#5000squ

arefootstores

#sm

aller-fo

rmatstores

-2.35%

927

54

900

946

$

344

$

195

$ -1

.79%

244

$

935

93

910

17

3.82%

988

61

960

951

$

340

$

196

$

0.54%

243

$

375

94

969

19

-4.15%

1.82%

-7.41%

4.35%

15.77%

5.01%

7.82%

9.19%

5.50%

1.69%

5.66%

1,044

1,053

1,059

1,074

1,088

1,088

1,102

1,116

1,130

1,144

1,144

56

9

6

15

14

44

14

14

14

14

56

1,020

1,049

1,056

1,067

1,081

1,068

1,095

1,109

1,123

1,137

1,121

924

$

269

$

196

$

227

$

240

$

928

$

274

$

200

$

226

$

241

$

936

$

326

$

100

$

65$

83$

85$

331

$

102

$

66$

82$

85$

334

$

195

$

51$

50$

48$

50$

198

$

51$

50$

48$

51$

199

$

-2.85%

-0.84%

-0.92%

1.78%

1.20%

0.37%

1.77%

1.95%

-0.49%

0.36%

0.88%

271

$

239

$

277

$

261

$

256

$

256

$

239

$

265

$

266

$

265

$

265

$

449

753

983

804

852

833

860

868

876

883

872

97

98

99

104

109

109

114

119

124

129

129

1,024

1,034

1,040

1,054

1,068

1,068

1,082

1,096

1,110

1,124

1,124

20

19

19

20

20

20

20

20

20

20

20

Totalstores

927

988

1,044

1,053

1,059

1,074

1,088

1,088

1,102

1,116

1,130

1,144

1,144

SquareFeet:

#5000sfstores

#sm

aller-fo

rmat

#largerfo

rmat

Totalsqu

arefeetfo

rallstores

Averagesqu

arefeet

Averagereven

uepersqu

arefoot

Year-to-yearchangeinaveragereven

ueperSF

4,550,000

39,100

4,

589,100

4,467,850

0.19069

$

-1.69%

4,845,000

43,700

4,

888,700

4,751,783

0.19224

$

0.81%

5,120,000

5,170,000

5,200,000

5,270,000

5,340,000

5,340,000

5,410,000

5,480,000

5,550,000

5,620,000

5,620,000

46,000

43,700

43,700

46,000

46,000

46,000

46,000

46,000

46,000

46,000

46,000

5,166,000

5,213,700

5,243,700

5,316,000

5,386,000

5,386,000

5,456,000

5,526,000

5,596,000

5,666,000

5,666,000

5,048,117

5,189,850

5,228,700

5,279,850

5,351,000

5,285,233

5,421,000

5,491,000

5,561,000

5,631,000

5,549,333

0.18682

$

0.05435

$

0.03958

$

0.04591

$

0.04842

$

0.18741

$

0.05531

$

0.04035

$

0.04567

$

0.04857

$

0.18900

$

-2.82%

-0.89%

-1.02%

1.71%

1.15%

0.31%

1.75%

1.95%

-0.51%

0.31%

0.85%

Evolution Pe

troleu

m Corp. (E

PM)

BURK

ENRO

AD REP

ORT

S (w

ww.burkenroa

d.org)

Nov

embe

r 16, 201

6

31

HIBB

ETTSPORT

SINC.(H

IBB)

Annu

aland

QuarterlyStatemen

tsofC

ashFlow

sInth

ousand

sForthe

perioden

ded

Cashflow

sfromope

ratin

gactiv

ities:

Netincome

Adjustmen

ts

Depreciatio

nandam

ortization

Deferred

and

unrecognizedincometaxbe

nefit,net

Excessta

xbe

nefitfrom

stockop

tionexercises

(Gain)Losso

ndisposaland

write-do

wnofassets,net

201

4A 70,877

$

13,847

(73)

(4

,357

)

173

201

5A 73,584

$

15,990

4,220

(2,911

)

181

201

6A

03-M

ayA

02-AugA

01-NovE

31-Ja

nE

201

7E

02-M

ayE

01-AugE

31-OctE

30-Ja

nE

2018E

70,528

$

27,906

$

6,510

$

19,490

$

20,159

$

74,064

$

30,087

$

7,108

$

20,561

$

20,500

$

78,256

$

17,038

4,599

4,639

4,674

4,827

18,740

4,953

5,129

5,278

5,425

20,785

1,285

(900

)

(156

)

2018E

2017E

Stock-basedcompe

nsation

Other

Changesinop

eratingassetsand

liabillities

Tradereceivables,net

Accoun

tsre

ceivable

Inventories,net

Prep

aidexpe

nsesand

othercurrentassets

5,838

(1,993

)

(5,167

)

36

4,468

117

706

(1

3,86

3)

6,614

5,198

2,149

947

818

882

4,796

2,427

948

818

882

5,075

19

30

(474

)

16,280

15,855

(16,76

9)

(503

)

(518

)

17,790

(106

)

(4,271

)

(295

)

(4,566

)

(718

)

1,379

(571

)

(344

)

(254

)

607

(3,710

)

(256

)

(3,966

)

(623

)

1,198

(496

)

(299

)

(221

)

(42,69

1)

31,258

(41,06

5)

12,200

2,486

4,878

15,298

(33,04

8)

(4,347

)

(2,596

)

(24,69

3)

2,186

8,053

(8,326

)

(8,157

)

(8,430

)

8,157

(8,401

)

(245

)

Othernon

curren

tassets

Accoun

tspayable

(475

) (2

7,48

9)

469,907

(443

)

-

4,017

(22,78

4)

39,567

(6,942

)

12,767

22,608

5,279

4,104

(9,032

)

8,966

9,317

Deferred

rent

1,798

2,240

3,076

(3,011

)

227

(2,785

)

227

227

227

227

906

Accrue

dexpe

nsesand

other

Otherchangeinassetsa

ndliabilitie

sTo

talchangeinassetsa

ndliabilitie

sNetcashprovided

byop

erations

Cashflow

sfrominvestingactiv

ities:

Purchaseofinvestm

ents(n

et)

Capitalexpen

ditures

738

(452

) (3

3,00

4)

53,301

(704

) (5

0,50

7)

1,093

6,860

10

2,392

(90)

(22,87

3)

(1,160

)

4,863

2,883

7,746

1,192

927

(2,039

)

2,025

2,104

4,809

(2,642

)

2,167

-

(34,51

4)

21,336

(12,46

6)

(873

)

9,655

17,653

28,811

(25,21

4)

(16,25

8)

(423

)

(13,08

4)

58,479

56,009

(340

)

23,635

51,804

131,108

49,509

(12,53

2)

9,880

44,175

91,032

65 (25,14

7)

(6,780

)

(5,897

)

(12,05

8)

(11,92

7)

(36,66

2)

(12,03

7)

(12,14

7)

(12,25

7)

(12,36

7)

(48,80

9)

Proceedsfrom

saleso

fprope

rtyandeq

uipm

ent

Proceedsfrom

insurance

Other,net

Netcashused

ininvestingactiv

ities

Cashflow

sfromfinancingactiv

ities:

221

(5

0,99

0)

320

84 (22,55

9)

298

107

147

(4)

143

(24,67

7)

(6,633

)

(5,901

)

(12,05

8)

(11,92

7)

(36,51

9)

(12,03

7)

(12,14

7)

(12,25

7)

(12,36

7)

(48,80

9)

Cashusedforstockre

purchases

Netpaymen

tsonrevolvingcred

itfacilityandcapitalleaseobligations

Excessta

xbe

nefitfrom

stockop

tionexercises

Cashusedtose

ttlenetsh

areeq

uityre

wards

Proceedsfrom

optionsexercise

dandpu

rchaseofsharesu

nderth

eem

ployeestockpu

rchaseplan,includ

ing

taxbe

nefit

Other,net

Netcashprovided

by(usedin)financingactivities

Increase(d

ecrease)incash&te

mpo

rarycashinvestmen

tsCashand

tempo

raryinvestmen

tsatb

eginningofp

eriod

Cashand

tempo

raryinvestmen

tsate

ndofp

eriod

(15,80

7)

(268

)

4,357

(4,288

)

3,011

(1

2,99

5)

(10,68

4)

76,911

66,227

(56,30

2)

(377

)

2,911

(4,669

)

774

(5

7,66

3)

22,170

66,227

88,397

(89,21

2)

(7,378

)

(21,37

6)

(27,12

5)

(27,12

5)

(83,00

3)

(27,12

5)

(27,12

5)

(346

)

(113

)

(114

)

(187

)

(187

)

(600

)

(198

)

(198

)

(198

)

(198

)

(793

)

900

(2,120

)

853

169

152

452

452

1,225

452

452

452

452

1,807

(913

)

51

(862

)

(89,92

5)

(8,235

)

(21,28

7)

(26,85

9)

(26,85

9)

(83,24

0)

(26,87

1)

254

254

254

(26,11

0)

(56,12

3)

41,141

(27,52

8)

(15,28

2)

13,017

11,349

10,601

(24,42

5)

(2,124

)

32,061

16,113

88,397

32,274

73,415

45,887

30,605

32,274

43,623

54,224

29,799

27,675

43,623

32,274

73,415

45,887

30,605

43,623

43,623

54,224

29,799

27,675

59,736

59,736

Ope

ratin

gcashflow

persh

areexclud

ing

workingcapita

lchanges

Ope

ratin

gcashflow

persh

areinclud

ing

workingcapita

lchanges

3.29

$

2.03

$

3.73

$

4.00

$

3.85

$

1.51

$

0.54

$

1.10

$

1.95

$

5.25

$

0.98

$

0.60

$

1.24

$

2.11

$

4.94

$

2.42

$

2.44

$

(0.02)

$

1.06

$

2.40

$

6.06

$

2.36

$

(0.60)

$

0.47

$

2.09

$

4.32

$

Evolution Pe

troleu

m Corp. (E

PM)

BURK

ENRO

AD REP

ORT

S (w

ww.burkenroa

d.org)

Nov

embe

r 16, 201

6

32

HIBB

ETTSPORT

SINC.(H

IBB)

Ratio

s

Forthe

perioden

ded

Prod

uctiv

ityRatios

Receivablesturno

ver

201

4A

118.71

201

5A

114.35

201

6A

03-M

ay-16A

02-Aug-16A

01-Nov-16E

31-Ja

n-17

E201

7E

02-M

ay-17E

01-Aug-17E

31-Oct-17E

30-Ja

n-18

E20

18E

128.73

79.73

N/A

60.74

31.38

126.92

32.58

25.81

32.44

31.49

119.61

2018

E20

17E

Inventoryturnover

2.42

2.51

2.33

0.66

0.51

0.54

0.60

2.27

0.70

0.53

0.54

0.59

2.32

Workingcapita

lturno

ver

3.89

3.74

3.94

1.19

0.86

1.09

1.24

4.64

1.49

1.10

1.21

1.22

4.84

Netfixedassetturno

ver

12.61

10.21

9.70

2.75

1.99

2.24

2.24

8.99

2.45

1.71

1.86

1.90

7.88

Totalassettu

rnover

2.15

2.10

2.11

0.63

0.45

0.52

0.56

2.18

0.63

0.46

0.51

0.53

2.09

#ofdaysS

alesinA/R

3.59

3.02

2.73

NA

NA

3.00

3.00

3.14

3.00

3.00

3.00

3.00

3.13

#ofdaysC

osto

fSalesinInventory

151.95

149.15

168.82

129.41

192.21

165.71

151.27

158.91

127.12

181.39

169.19

156.02

163.37

#ofdaysC

ash-basedexpe

nsesinpayables

52.76

54.31

52.91

51.44

55.99

64.82

63.97

66.28

63.73

63.58

64.23

63.75

65.52

Liqu

idity

Measures

Curren

tratio

3.58

3.48

3.14

3.66

2.88

2.77

2.48

2.48

2.40

2.36

2.58

2.57

2.57

Quickra

tio0.77

0.90

0.34

0.79

0.37

0.29

0.35

0.35

0.42

0.23

0.23

0.44

0.44

Cashra

tio0.77

0.90

0.34

0.79

0.37

0.29

0.35

0.35

0.42

0.23

0.23

0.44

0.44

Cashflow

from

ope

ratio

nsra

tio0.58

1.00

0.56

0.60

0.00

0.20

0.38

0.96

0.35

-0.08

0.07

0.30

0.61

Workingcapita

l23

5,42

025

3,37

322

5,17

824

7,80

123

1,50

321

4,54

520

1,84

220

1,84

220

0,62

820

2,14

821

7,02

923

1,95

023

1,95

0

FinancialRisk

(Leverage)Ratios

Totaldeb

t/eq

uityra

tio0.37

0.39

0.42

0.36

0.47

0.46

0.52

0.52

0.54

0.54

0.47

0.47

0.47

Debt/equ

ityra

tio(e

xcludingdeferredtaxes)

0.37

0.39

0.42

0.36

0.47

0.46

0.52

0.52

0.54

0.54

0.47

0.47

0.47

TotalLTde

bt/equ

ityra

tio0.07

0.08

0.08

0.08

0.09

0.08

0.08

0.08

0.08

0.08

0.07

0.07

0.07

LTdeb

t/eq

uity(e

xcludingdeferredtaxes)

0.07

0.08

0.08

0.08

0.09

0.08

0.08

0.08

0.08

0.08

0.07

0.07

0.07

Totaldeb

tratio

0.27

0.28

0.30

0.27

0.32

0.32

0.34

0.34

0.35

0.35

0.32

0.32

0.32

Debtra

tio(e

xcud

ingde

ferred

taxes)

0.27

0.28

0.30

0.27

0.32

0.32

0.34

0.34

0.35

0.35

0.32

0.32

0.32

Profita

bility/Va

luationMeasures

Grossp

rofitm

argin

36.30%

35.77%

35.28%

37.22%

32.99%

36.40%

35.40%

35.66%

37.22%

32.99%

36.40%

35.40%

35.65%

Ope

ratin

gprofitmargin

13.37%

12.93%

11.88%

15.72%

4.89

%12

.86%

12.45%

11.90%

16.04%

5.15

%12

.95%

11.99%

11.94%

Returnonassets

17.86%

16.94%

15.76%

6.23

%1.41

%4.21

%4.36

%16

.28%

6.35

%1.46

%4.12

%3.94

%15

.58%

Returnoneq

uity

26.10%

23.40%

22.19%

8.68

%2.00

%6.18

%6.51

%23

.99%

9.72

%2.24

%6.19

%5.79

%23

.31%

Earningsbeforeinterestm

argin

8.30

%8.02

%7.45

%9.87

%3.12

%8.01

%7.75

%7.45

%10

.01%

3.18

%8.07

%7.47

%7.44

%EB

ITDA

margin

14.95%

14.62%

13.62%

17.30%

7.07

%14

.74%

14.26%

13.74%

17.65%

7.41

%14

.97%

13.92%

13.87%

EBITDA

/Assets

32.09%

30.75%

28.71%

10.90%

3.17

%7.71

%7.99

%29

.92%

11.17%

3.37

%7.62

%7.31

%28

.96%

THIS PAGE LEFT INTENTIONALLY BLANK

BURKENROAD REPORTS RATING SYSTEM

MARKET OUTPERFORM: This rating indicates that we believe forces are in place that would enable this company's stock to produce returns in excess of the stock market averages over the next 12 months.

MARKET PERFORM: This rating indicates that we believe the investment returns from this company's stock will be in line with those produced by the stock market averages over the next 12 months.

MARKET UNDERPERFORM: This rating indicates that while this investment may have positive attributes, we believe an investment in this company will produce subpar returns over the next 12 months. BURKENROAD REPORTS CALCULATIONS

CPFS is calculated using operating cash flows excluding working capital changes.

All amounts are as of the date of the report as reported by Bloomberg or Yahoo Finance unless otherwise noted. Betas are collected from Bloomberg.

Enterprise value is based on the equity market cap as of the report date, adjusted for long‐term debt, cash, & short‐term investments reported on the most recent quarterly report date.

12‐month Stock Performance is calculated using an ending price as of the report date. The stock performance includes the 12‐month dividend yield.

2016‐2017 COVERAGE UNIVERSE

Amerisafe Inc. (AMSF) MidSouth Bancorp Inc. (MSL)

Bristow Group Inc. (BRS) Newpark Resources Inc. (NR)

CalIon Petroleum Company (CPE) PetroQuest Energy Inc. (PQ)

Cal‐Maine Foods Inc. (CALM) Pool Corporation (POOL)

Computer Programs and Systems, Inc. (CPSI) Powell Industries Inc. (POWL)

Conn's Inc. (CONN) RPC Incorporated (RES)

Crown Crafts Inc. (CRWS) Ruth’s Hospitality Group Inc. (RUTH)

Denbury Resources Inc. (DNR) Sanderson Farms Inc. (SAFM)

EastGroup Properties Inc. (EGP) SEACOR Holdings Inc. (CKH)

Era Group Inc. (ERA) Sharps Compliance Inc. (SMED)

Evolution Petroleum Corp. (EPM) Spark Energy Inc. (SPKE)

Globalstar (GSAT) Stone Energy Corp. (SGY)

Gulf Island Fabrication Inc. (GIFI) Sunoco LP (SUN)

Hibbett Sports (HIBB) Superior Uniform Group Inc. (SGC)

Hornbeck Offshore Services Inc. (HOS) Team Incorporated (TISI)

IBERIABANK Corp. (IBKC) The First Bancshares (FBMS)

Investar Holding Corporation (ISTR) Tidewater Inc. (TDW)

ION Geophysical Corp. (IO) U.S. Physical Therapy, Inc. (USPH)

LHC Group, Inc. (LHCG) Vaalco Energy Inc. (EGY)

Marine Products Corp. (MPX) Willbros Group Inc. (WG)

PETER RICCHIUTI Director of Research Founder of Burkenroad Reports [email protected] ANTHONY WOOD Senior Director of Accounting [email protected]

AUTHOR HUGHLEY STEELE HULL KATHLEEN MCCABE J.P. NAVARRO Associate Directors of Research

BURKENROAD REPORTS Tulane University New Orleans, LA 70118‐5669 (504) 862‐8489 (504) 865‐5430 Fax

To receive complete reports on any of the companies we follow, contact:Peter Ricchiuti, Founder & Director of Research

Tulane UniversityFreeman School of BusinessBURKENROAD REPORTS

Phone: (504) 862-8489Fax: (504) 865-5430

E-mail: [email protected] visit our web site at www.BURKENROAD.org

Printed on Recycled Paper

Named in honor of William B. Burkenroad Jr., an alumnus and a longtime supporter of Tulane’s business school, and funded through contributions from his family and friends, BURKENROAD REPORTS is a nationally recognized program, publishing objective, investment research reports on public companies in our region. Students at Tulane University’s Freeman School of Business prepare these reports.Alumni of the BURKENROAD REPORTS program are employed at a number of highly respected financial institutions including:ABN AMRO Bank · Aegis Value Fund · Invesco/AIM Capital Management · Alpha Omega Capital Partners · American General Investment Management · Ameriprise Financial · Atlas Capital · Banc of America Securities · Bank of Montreal · Bancomer · Barclays Capital · Barings PLC · Bearing Point · Bessemer Trust · Black Gold Capital· Bloomberg · Brookfield Asset Management · Brown Brothers Harriman Capital · Blackrock Financial Management · Boston Consulting Group · Buckingham Research · California Board of Regents · Cambridge Associates· Canaccord Genuity · Cantor Fitzgerald · Chaffe & Associates · Citadel Investment Group · Citibank · Citigroup Private Bank · City National Bank · Cornerstone Resources · Credit Suisse · D. A. Davidson & Co. · Deutsche Banc · Duquesne Capital Management · Equitas Capital Advisors· Factset Research · Financial Models · First Albany · Fiduciary Trust · Fitch Investors Services · Forex Trading · Franklin Templeton · Friedman Billings Ramsay · Fulcrum Global Partners · Gintel Asset Management · Global Hunter Securities · Goldman Sachs · Grosever Funds · Gruntal & Co. · Guggenheim Securities , LLC · Hancock Investment Services · Healthcare Markets Group · Capital One Southcoast · Howard Weil Labouisse Friedrichs · IBERIABANK Capital Markets · J.P. Morgan Securities · Janney Montgomery Scott · Jefferies & Co. · Johnson Rice & Co. · KBC Financial · KDI Capital Partners · Key Investments · Keystone Investments · Legacy Capital · Liberty Mutual · Lowenhaupt Global Advisors · Mackay Shields · Manulife/John Hancock Investments · Marsh & McLennan · Mercer Partners · Merrill Lynch · Miramar Asset Management · Moodys Investor Services · Morgan Keegan · Morgan Stanley · New York Stock Exchange · Perkins Wolf McDonnell · Piper Jaffray & Co. · Professional Advisory Services · Quarterdeck Investment Services · RBC · Raymond James · Restoration Capital · Rice Voelker, LLC · Royal Bank of Scotland· Sandler O'Neill & Partners · Sanford Bernstein & Co. · Scotia Capital · Scottrade · Second City Trading LLC · Sequent Energy · Sidoti & Co · Simmons & Co. · Southwest Securities · Stephens & Co. · Sterne Agee · Stewart Capital LLC · Stifel Nicolaus · Sun-Trust Capital Markets · Susquehanna Investment Group · Thomas Weisel Partners · TD Waterhouse Securities · Texas Employee Retirement System · Texas Teachers Retirement System · ThirtyNorth Investments · Thornburg Investment Management · Tivoli Partners · Tudor Pickering & Co. · Tulane University Endowment Fund · Turner Investment Partners · UBS · Value Line Investments · Vaughan Nelson Investment Management · Wells Fargo Capital Management · Whitney National Bank · William Blair & Co. · Zephyr Management

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