ACADEMY SPORTS & OUTDOORS INC (NASDAQ:ASO) – A Potentially Undervalued Retail Stock

ACADEMY SPORTS & OUTDOORS INC (NASDAQ:ASO) was identified by our Decent Value stock screener as a candidate with strong valuation metrics while maintaining solid fundamentals in profitability, financial health, and growth. The company’s current valuation suggests it may be trading below its intrinsic value, making it worth a closer look for value-oriented investors.

Valuation Highlights

ASO’s valuation metrics stand out, with a Price/Earnings (P/E) ratio of 7.46, significantly below both the industry average (55.02) and the S&P 500 average (26.70). This suggests the stock is priced attractively relative to earnings. Additionally:

• Price/Forward Earnings is 7.49, also well below the S&P 500 average (22.49).
• Enterprise Value/EBITDA and Price/Free Cash Flow ratios indicate ASO is cheaper than 83-85% of its industry peers.

Profitability Strengths

The company maintains strong profitability, with key metrics outperforming many competitors:

• Operating Margin of 9.08% (better than 81.8% of industry peers).
• Return on Equity (ROE) of 20.88%, placing it in the top quartile of its sector.
• Consistent profitability over the past five years, with positive earnings and cash flow.

Financial Health

ASO’s balance sheet reflects stability, though there are minor concerns:

• Debt/Equity ratio of 0.24, indicating low reliance on debt financing.
• Current Ratio of 1.78, showing sufficient liquidity, though the Quick Ratio (0.42) suggests some short-term liquidity pressure.
• Altman-Z score of 2.88, signaling limited bankruptcy risk.

Growth Considerations

While past growth has been mixed, future projections remain steady:

• Revenue growth expected at 5.62% annually over the next few years.
• EPS growth forecast at 7.17% per year, though recent declines in earnings (-13.32% YoY) warrant monitoring.

Our Decent Value screener lists more stocks with similar characteristics and is updated daily.
For a deeper dive, review the full fundamental report on ASO.

Disclaimer

This is not investment advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.