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1. Company Snapshot

1.a. Company Description

Academy Sports and Outdoors, Inc., through its subsidiaries, operates as a sporting goods and outdoor recreational products retailer in the United States.The company sells coolers and drinkware, camping accessories, camping equipment, sunglasses, backpacks, and sports bags; marine equipment and fishing rods, reels, baits, and equipment; firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, optics, airguns, and hunting equipment; team sports equipment, including baseball, football, basketball, soccer, golf, racket sports, and volleyball; fitness equipment and accessories, and nutrition supplies; and patio furniture, outdoor cooking, wheeled goods, trampolines, playsets, watersports, and pet equipment, as well as electronics products, watches, consumables, batteries, etc.It also offers outdoor apparel, seasonal apparel, denim, work apparel, graphic t-shirts, and accessories; boys and girls outdoor and athletic apparel; sporting apparel and apparel for fitness; professional and collegiate team licensed apparel and accessories; casual shoes and slippers, work and western boots, youth footwear, socks, and hunting and seasonal footwear; and boys and girls athletic footwear, running shoes, athletic lifestyle and training shoes, team and specialty sports footwear, and slides.


The company sells its products under the Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Outdoor Gourmet, and Freely brand names.As of June 14, 2022, it operated 260 retail locations in 16 contiguous states.The company also sells merchandise to customers through the academy.com website.


Academy Sports and Outdoors, Inc.was founded in 1938 and is headquartered in Katy, Texas.

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1.b. Last Insights on ASO

Academy Sports and Outdoors' recent performance has been impacted by several negative drivers. Weakness in its core lower-income consumer base and elevated inventory levels pose significant risks to near-term demand and margin stability. Despite strategic initiatives like new store rollouts and brand partnerships yielding positive results, with same-store sales and e-commerce growth, the company faces challenges. Additionally, short interest in the stock has increased by 44.3% in October, indicating growing bearish sentiment. The company's downbeat Q2 results also contributed to the negative performance.

1.c. Company Highlights

2. Academy Sports and Outdoors Delivers Mixed Q2 Results

Academy Sports and Outdoors reported Q2 sales of $1.6 billion, a 3.3% increase year-over-year, with a 0.2% comp growth driven by improved performance since Q1. E-commerce sales rose 18%, contributing to an overall gross margin of 36%. Earnings per share (EPS) came in at $1.85, with an adjusted EPS of $1.94, slightly below estimates of $2.12. Gross margin held steady at 36%, with merchandise margin expansion offset by higher e-commerce shipping costs.

Publication Date: Sep -07

📋 Highlights
  • Total Revenue Growth:: Q2 sales reached $1.6 billion, reflecting a 3.3% year-over-year increase, with a 0.2% same-store sales growth.
  • E-commerce Surge:: Online sales grew by 18%, contributing to a 120 basis-point increase in e-commerce penetration.
  • Gross Margin Stability:: Maintained a 36% gross margin, supported by merchandise margin improvements despite higher e-commerce shipping costs.
  • New Store Impact:: Opened 3 new stores in Q2, bringing the total to 306 locations across 21 states, with strategic focus on store productivity and tech investments like RFID.
  • Inventory and Guidance:: Inventory per store increased 8.2% YoY, and full-year guidance was revised to a -3% to +1% same-store sales range from -4% to +1%.

Financial Performance

The company's financial performance was characterized by a 3.3% year-over-year sales growth, driven by a modest 0.2% comp growth. E-commerce growth was a significant contributor, rising 18% and adding 120 basis points to e-commerce penetration. The gross margin remained stable at 36%, despite higher shipping costs associated with e-commerce growth.

Valuation Metrics

To understand what's priced into the stock, we can look at various valuation metrics. The current P/E Ratio stands at 9.12, P/B Ratio at 1.63, and P/S Ratio at 0.57. Additionally, the EV/EBITDA ratio is 6.94, indicating the company's enterprise value relative to its earnings before interest, taxes, depreciation, and amortization. The Dividend Yield is 0.94%, and the Free Cash Flow Yield is 8.74%, suggesting a reasonable return for investors. Return on Invested Capital (ROIC) is 8.93%, and Return on Equity (ROE) is 18.57%, indicating efficient use of capital.

Operational Highlights

Operationally, the company focused on strategic initiatives such as new store openings, e-commerce improvements, and brand expansions. Three new stores were opened in Q2, bringing the total to 306 across 21 states. The company also accelerated e-commerce growth and expanded brand partnerships, including Jordan and Converse. Technology investments, such as RFID and handheld devices, improved in-stock levels and customer convenience.

Guidance Update

The company updated its guidance for FY2025 to a comp growth range of -3% to +1%, reflecting improved performance and successful tariff mitigation strategies. This update indicates a more optimistic outlook for the year, driven by the company's efforts to manage tariffs and improve operational efficiency.

3. NewsRoom

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What Analyst Projections for Key Metrics Reveal About Academy Sports and Outdoors (ASO) Q3 Earnings

Dec -04

Source: zacks.com

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Financial Comparison: Leatt (OTCMKTS:LEAT) vs. Academy Sports and Outdoors (NASDAQ:ASO)

Dec -04

Source: defenseworld.net

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Academy Sports + Outdoors Appoints Three to its Board of Directors

Dec -02

Source: prnewswire.com

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Academy Sports and Outdoors, Inc. $ASO Shares Purchased by Creative Planning

Nov -27

Source: defenseworld.net

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American Century Companies Inc. Boosts Holdings in Academy Sports and Outdoors, Inc. $ASO

Nov -26

Source: defenseworld.net

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Academy Sports + Outdoors Announces Third Quarter Fiscal 2025 Results Conference Call

Nov -25

Source: prnewswire.com

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Academy Sports + Outdoors Opens Five New Stores in Q4, Taking New Store Total to 24 in Fiscal 2025

Nov -18

Source: prnewswire.com

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Academy Sports + Outdoors Unwraps this Holiday Season's Top Gifts Delivering Legendary Value and Undefeatable Prices

Nov -06

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.03%)

6. Segments

Outdoors

Expected Growth: 3.5%

Academy Sports and Outdoors' Outdoors segment growth of 3.5% is driven by increasing consumer participation in outdoor activities, favorable weather conditions, and strategic investments in e-commerce and omnichannel capabilities. Additionally, the company's focus on private label brands, such as Magellan Outdoors, and partnerships with popular outdoor brands like Yeti and Coleman, contribute to the segment's growth.

Apparel

Expected Growth: 2.8%

Academy Sports and Outdoors' apparel segment growth of 2.8% is driven by increasing demand for athleisure wear, strategic partnerships with popular brands, and effective marketing campaigns targeting outdoor enthusiasts. Additionally, the company's focus on private label offerings and e-commerce expansion have contributed to the segment's growth.

Sports and Recreation

Expected Growth: 3.2%

Academy Sports and Outdoors' 3.2% growth in Sports and Recreation is driven by increasing participation in outdoor activities, rising health awareness, and growing demand for athleisure wear. Additionally, the company's omnichannel strategy, private label offerings, and strategic store locations contribute to its growth.

Footwear

Expected Growth: 2.5%

Academy Sports and Outdoors' 2.5% growth in footwear is driven by increasing participation in outdoor activities, expanding product offerings in popular brands like Nike and Adidas, and strategic marketing efforts targeting health-conscious millennials. Additionally, the company's omnichannel approach and competitive pricing strategy contribute to its growth in the footwear segment.

Other

Expected Growth: 2.2%

Academy Sports and Outdoors, Inc.'s 2.2% growth in the 'Other' segment is driven by increasing online sales, expansion of private label brands, and strategic partnerships. Additionally, the company's focus on omnichannel retailing, improved supply chain management, and effective inventory control have contributed to this growth.

7. Detailed Products

Hunting Gear

Academy Sports and Outdoors offers a wide range of hunting gear including firearms, ammunition, archery equipment, and hunting apparel.

Fishing Gear

Academy Sports and Outdoors offers a variety of fishing gear including rods, reels, lures, and fishing apparel.

Camping Gear

Academy Sports and Outdoors offers a wide range of camping gear including tents, sleeping bags, backpacks, and camping accessories.

Fitness Equipment

Academy Sports and Outdoors offers a variety of fitness equipment including treadmills, ellipticals, exercise bikes, and strength training equipment.

Team Sports Equipment

Academy Sports and Outdoors offers a wide range of team sports equipment including baseball bats, soccer balls, basketballs, and footballs.

Outdoor Apparel

Academy Sports and Outdoors offers a variety of outdoor apparel including jackets, pants, shirts, and footwear.

Recreational Games

Academy Sports and Outdoors offers a variety of recreational games including cornhole, ladder toss, and giant Jenga.

8. Academy Sports and Outdoors, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Academy Sports and Outdoors, Inc. faces moderate threat from substitutes, as customers have alternative options for outdoor recreation and sporting goods. However, the company's strong brand recognition and wide range of products mitigate this threat to some extent.

Bargaining Power Of Customers

Academy Sports and Outdoors, Inc. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's loyalty programs and rewards schemes help to retain customers and reduce price sensitivity.

Bargaining Power Of Suppliers

Academy Sports and Outdoors, Inc. has a diverse supplier base, which reduces dependence on individual suppliers. However, the company still faces some pressure from suppliers, particularly those providing high-demand products.

Threat Of New Entrants

Academy Sports and Outdoors, Inc. operates in a highly competitive market, but the company's strong brand recognition, extensive store network, and established relationships with suppliers create barriers to entry for new entrants.

Intensity Of Rivalry

Academy Sports and Outdoors, Inc. operates in a highly competitive market, with several established players vying for market share. The company faces intense competition from online retailers, specialty stores, and other sporting goods retailers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.65%
Debt Cost 3.95%
Equity Weight 76.35%
Equity Cost 10.98%
WACC 9.32%
Leverage 30.97%

11. Quality Control: Academy Sports and Outdoors, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.5/10

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Academy Sports

A-Score: 5.0/10

Value: 7.7

Growth: 6.6

Quality: 5.5

Yield: 1.0

Momentum: 5.0

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Quality: 4.1

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

50.35$

Current Price

50.35$

Potential

-0.00%

Expected Cash-Flows