Academy Sports and Outdoors Soars on Robust Q2 Results; Lifts Guidance

Full-line sporting goods and outdoor recreation retailer Academy Sports and Outdoors, Inc. (ASO) delivered outstanding second-quarter financials, with revenue hitting an all-time quarterly high.

Sales growth was driven by continued strength in both sporting goods and outdoor recreation markets, improving in-stocks, and solid consumer demand across all of the company’s offerings. Shares soared 1.5% on the news, closing at $44.07 on September 9. (See Academy Sports and Outdoors stock charts on TipRanks)

The company reported adjusted earnings of $2.34 per share, an increase of 29.3% compared to the prior-year period and significantly higher than the Street’s estimate of $1.37 per share.

Additionally, net sales for the quarter came in at $1.79 billion, up 11.5% compared to the year-ago period, and outpaced analysts’ estimates of $1.64 billion. Also, comparable sales grew 11.4% year-over-year, with strong demand witnessed across the apparel, footwear, field, fitness, and team sports categories.

Commenting on the solid results, Ken Hicks, Chairman, President, and CEO of the company said, “We plan to build on this continued success by further sharpening our focus on the fundamentals of the business and investing in our strategic initiatives with the goal of adding new customers, gaining market share and driving sales and profit growth.”

Based on the strong second-quarter performance, ASO raised its full-year Fiscal 2021 guidance, with expectations of utilizing its capabilities to accelerate the company’s omnichannel, new store, and other growth initiatives.

Academy now forecasts FY21 net sales to fall in the range of $6.465 – $6.620 billion and earnings to be in the range of $5.45 – $5.80 per share. Consensus estimates for net sales and earnings are pegged at $6.2 billion and $4.84 per share, respectively.

Furthermore, on September 2, the Board declared a new $500 million share buyback program under which ASO can repurchase its common shares over the next three years.

Impressed by the company’s quarterly financial performance, Wells Fargo analyst Kate Fitzsimons lifted the price target on the stock to $55 (24.8% upside potential) from $45 while maintaining a Buy rating.

Fitzsimons has confidence in ASO’s management, including CEO Ken Hicks, to successfully implement their “retail 101” productivity and margin enhancing initiatives.

The analyst’s optimistic view of the stock is based on strong business improvements, a stronger balance sheet, and the execution of shareholder-friendly actions.

Overall, the stock commands a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Academy Sports and Outdoors price target of $44.33 implies that shares are fairly valued at current levels. Shares have exploded 239.3% over the past year.