Academy Sports and Outdoors (ASO): Reassessing Valuation After Mixed Earnings and Slight Guidance Cut

Academy Sports and Outdoors (ASO) just delivered a mixed financial update, with third quarter sales and profit ticking higher even as nine month earnings slipped and full year guidance was nudged slightly lower.

See our latest analysis for Academy Sports and Outdoors.

The mixed guidance and rapid store expansion have left investors reassessing the balance between growth and execution risk, with the 1 month share price return of 17.38% contrasting against a 1 year total shareholder return of negative 8.33 percent. This hints that momentum is rebuilding, while the longer term story remains more muted.

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With the shares still trading at a discount to analyst targets and management trimming guidance only at the margins, is Academy Sports and Outdoors quietly undervalued, or are investors already pricing in the next leg of store led growth?

Most Popular Narrative Narrative: 12.2% Undervalued

With Academy Sports and Outdoors last closing at $51.88 against a narrative fair value near $59.10, the valuation case leans toward a meaningful upside scenario.

Analysts are assuming Academy Sports and Outdoors's revenue will grow by 6.6% annually over the next 3 years.

Analysts assume that profit margins will increase from 6.2% today to 6.4% in 3 years time.

Read the complete narrative.

Curious how steady revenue gains, firmer margins and a richer earnings multiple combine into that upside case, and what keeps the discount rate in check? Dive in.

Result: Fair Value of $59.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost pressures and an increasingly promotional environment could quickly erode margins, challenging both the growth trajectory as well as the current undervaluation thesis.

Find out about the key risks to this Academy Sports and Outdoors narrative.

Build Your Own Academy Sports and Outdoors Narrative

If you see the story differently or want to stress test your own assumptions, you can build a complete narrative in just minutes: Do it your way.

A great starting point for your Academy Sports and Outdoors research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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