The Bottom Is In For Academy Sports + Outdoors
The insiders have been buying Academy Sports + Outdoors (NASDAQ: ASO) this year but don’t read too much into that statement. Three insiders including two directors and one CEO made purchases in Q1 and Q2 that amount to less than 0.5% of the market cap at today’s prices. The buying is a bullish signal but a weak one and that is compounded by the most recent transaction. Director Beryl Raff bought a whopping 3 shares for a net $118.47 which left us scratching our heads. Buying is great but why only 3 shares?
The institutional activity, on the other hand, is far more bullish. The institutions have been net buyers for 3 of the last 4 quarters and acquired shares worth roughly 33% of the current market cap. That’s more than $1.10 billion and the activity picked up in the second quarter. Recent transactions include 1 from State Street Corp which upped its position by 73% and owns 2.85% of the company.
The Analysts See Potential In Academy Sports + Outdoors
And the analysts are supporting the stock as well. The company has picked up 5 analysts over the past year for a total of 12 who rate the stock a firm Buy. That rating is steady over the past year and includes a consensus price target more than 40% above the current action. The consensus target is flat over the last 30 days but up in the 3-month and 12-month comparisons and we think moving higher following the Q1 results.
The Q1 results included a cut to guidance which was expected but far less than anticipated and there are other catalysts as well. Oppenheimer pointed out the recent opening of a location in Atlanta, the first in over 2 years when it reiterated an Outperform rating and a $50 price target. They view the success as a confidence-building event that could lead the company to accelerate expansion plans. Oppenheimer’s target is $5 below the consensus of $55.
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Academy Sports + Outdoors Has A Solid Quarter
Academy Sports + Outdoors posted a decline in revenue and lowered its guidance but that is all the bad news we can give. The $1.47 billion in revenue is down 7% versus last year but this is versus the record-setting comp of 38.9% set last year that was driven by COVID trends and government stimulus. In the two-year stack, sales are up 36.6% and on track to continue growing. On a channel basis, eCommerce increased by 18.8% and was offset by a -7.5% decline in comp-store sales.
As for earnings, the company posted a 20 bps decline in gross margin that was far better than anticipated and, notably, included a decrease in freight costs. On the bottom line, the $1.73 in adjusted earnings is down from last year but beat consensus by $0.32, and this strength is expected by the end of the year. The company lowered its guidance for revenue to slightly below the consensus but this is offset by earnings strength. The EPS guidance was also lowered but to a range that brackets the consensus and leaves ample room for outperformance.
The Technical Outlook: Academy Sports + Outdoors Correction Is Over
Price action in Academy Sports + Outdoors was corrected over the past few quarters but that correction is over. The market has put in a Double Bottom that is on the verge of confirming reversal. The baseline is the next major hurdle and it will provide some resistance at the $40 level. If and when the market gets above that level we see it moving up to set new all-time highs.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Academy Sports and Outdoors (ASO) | $59.07 | +0.0% | 0.74% | 8.79 | Moderate Buy | $74.00 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
