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Analyzing Academy Sports' Position in the Retail Market: Is It Losing Ground?

Academy Sports (ASO) - ★★ - Ranked #89 in our Q2 2024 Mid & Small Cap Equity Rankings



Academy Sports and Outdoors (ASO), the Texas-based sporting goods retailer, has seen its stock decline nearly 4% year-to-date, and our analysis suggests the downward pressure may continue in the short term.


Founded in 1938 and headquartered in Katy, Texas, Academy Sports has long been a fixture in the Southern United States, providing a wide range of athletic equipment, apparel, and outdoor leisure products. However, the company's latest earnings report, released in late March, missed analyst estimates, triggering a sell-off in the stock.


According to our research, we are setting a price target of $70 for Academy Sports, which currently trades at $62.96 - a nearly 12% discount to our projection. This negative short-term outlook is driven by a combination of factors, including the company's recent earnings miss, macroeconomic headwinds, and potential challenges in the broader retail landscape.


During the most recent quarter, Academy Sports reported earnings of $2.21 per share, falling short of the $2.35 per share expected by Wall Street analysts. While the company's revenue for the quarter came in at $1.79 billion, slightly above estimates, the earnings miss was enough to spook investors and send the stock tumbling.


The retail environment remains challenging, with high inflation, rising interest rates, and economic uncertainty weighing on consumer spending is the view from our analyst team.


Those factors, combined with the company's recent earnings disappointment, lead us to believe Academy Sports' stock could face further downside in the near term.



However, it's worth noting that the company's long-term prospects may still be promising. Academy Sports has a strong foothold in its regional markets, and its focus on outdoor recreation and sporting goods could position it well as consumers seek more active and leisure-oriented hobbies. Additionally, the company's e-commerce offerings have been an area of growth, potentially offsetting some of the challenges in the brick-and-mortar retail environment.


Investors interested in Academy Sports should closely monitor the company's performance and the broader economic conditions that may impact consumer spending in the coming quarters. While the short-term outlook appears cautious, the company's long-term potential could still make it an attractive investment opportunity for those willing to weather the current market volatility.


In conclusion, Academy Sports has faced a tough road over the last few months and we believe the outlook can be shaky going forward but it does have upside potential if you are speculative in your portfolio. We just believe there are better opportunities out there for growth. Our 12. month price target is $70.



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The information provided in this report is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The opinions expressed in the report are our own and are subject to change without notice. We may have a position in the securities mentioned in the report, and we may buy or sell such securities without notice. Any investment decisions made based on the information in this report are solely the responsibility of the recipient. We do not accept any liability for any direct, indirect, or consequential loss arising from any use of this report or its contents.

 

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