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

ACADEMY SPORTS & OUTDOORS INC (NASDAQ:ASO) was identified by our stock screener as a decent value candidate. The company shows strong profitability and reasonable financial health while trading at an attractive valuation. Below, we examine why ASO may appeal to value investors.

Valuation

ASO stands out with a Valuation Rating of 8/10, indicating it trades at a discount compared to peers. Key highlights:

• P/E Ratio of 7.33 – Significantly lower than the industry average of 70.99 and the S&P 500’s 26.53.
• Forward P/E of 7.36 – Also well below the sector average of 38.22.
• Enterprise Value/EBITDA suggests ASO is cheaper than 83% of its industry peers.

Profitability

The company earns a Profitability Rating of 7/10, supported by:

• Strong Margins: Operating margin of 9.08% outperforms 81.67% of competitors.
• Consistent Earnings: ASO has been profitable for the past five years with a solid return on equity (20.88%).
• Efficient Capital Use: Return on invested capital (10.67%) is above the industry average.

Financial Health

With a Health Rating of 6/10, ASO maintains a stable financial position:

• Low Debt: Debt-to-equity ratio of 0.24 indicates minimal reliance on borrowing.
• Healthy Liquidity: Current ratio of 1.78 is better than 75% of peers.
• Share Buybacks: The company has reduced shares outstanding over the past five years.

Growth

While growth is more moderate (Growth Rating of 4/10), ASO shows:

• Revenue Expansion: Expected to grow at 5.62% annually in the coming years.
• Earnings Recovery: Analysts project 7.17% yearly EPS growth despite recent declines.

Our Decent Value Stocks screener lists more stocks with similar characteristics. For a deeper look, review the full fundamental report for ASO.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.