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Zacks Industry Outlook Highlights Academy Sports and Outdoors, Acushnet Holdings and Vista Outdoor
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For Immediate Release
Chicago, IL – October 14, 2022 – Today, Zacks Equity Research discusses Academy Sports and Outdoors, Inc. (ASO - Free Report) , Acushnet Holdings Corp. (GOLF - Free Report) and Vista Outdoor Inc. (VSTO - Free Report) .
The Zacks Leisure and Recreation Products industry is being hurt by concerns about the slowing U.S. economy. High inflation continues to hurt most industries and leisure and recreational products is no exception. The decline in new boat sales is a concern. However, the rise in fitness products sales due to increasing awareness about health and fitness among people bodes well. The industry participants, which design, market, retail, and distribute products for the outdoor and recreation market, are witnessing robust demand. Stocks like Academy Sports and Outdoors, Inc., Acushnet Holdings Corp. and Vista Outdoor Inc. are likely to benefit from the aforementioned trend.
Industry Description
The Zacks Leisure and Recreation Products industry comprises companies that provide amusement and recreational products, swimming pools, marine products, golf courses, boat repair and maintenance services and other ancillary services, including indoor and outdoor storage, and marine, as well as rental of boats and personal watercraft. Some of the industry participants manufacture outdoor equipment and apparel for climbing, mountaineering, backpacking and skiing.
Some companies also provide connected fitness products and subscriptions for multiple household users. The industry players primarily thrive on overall economic growth, which fuels consumer demand for products. In fact, demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of the Leisure and Recreation Products Industry
Concerns of Slowing U.S. Economy:A slowdown in the economy is likely to hurt the industry. Worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve’s hawkish stance to tame inflation might push the economy into a recession. A high inflation rate continues to hurt the industry.
Despite some moderation from a 40-year high level, inflation in the United States is proving to be much more stubborn than expected. According to the last released Consumer Price Index (CPI) numbers for August, the figure stood at 8.3% — high enough for the Fed to raise its core interest rate by another 0.75% and take its year-to-date increase to 3%. Inflationary cost increases in the areas of labor, compensation, healthcare, freight and rent are leading to higher expenses.
New Boat Sales Decline: New boat sales declined below the pre-pandemic level through July. Per National Marine Manufacturers Association (NMMA) reports, new powerboat sales were 187,000 units in the first seven months of 2022, down 18% from the same period in 2021.
The decline can be primarily attributed to uncertain economic conditions and supply chain turbulence. New pontoon sales decreased 13% in the first seven months of 2022, while new wake sport boats sales were down 11%. Despite the recent concern, per NMMA, 2022 is likely to be a healthy year for the boat industry.
Booming Golf Business:The golf industry has been doing exceptionally well amid the pandemic. Golf is benefiting from an increase in participation of young people. Technology has also been playing a vital role in reshaping the sport. Meanwhile, India and China have popped up as two of the largest emerging golf markets.
Per Golf Datatech and its 2020 National Golf Performance Report, 2020 rounds rose 13.9%, while equipment sales increased 10.1% in 2020. The uptrend continued in 2021, with rounds played increasing 5.5%. While comparing 2021 to 2019 (pre-pandemic), rounds played increased nearly 18%. This gives an indication that the industry has been performing exceptionally well over the past two years.
Zacks Industry Rank Indicates Dismal Prospects
The Zacks Leisure and Recreation Products industry is grouped within the broader Consumer Discretionary sector.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects.
The Leisure and Recreation Products industry currently carries a Zacks Industry Rank #213, which places it in the bottom 15% of more than 251 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since Mar 31, 2022, the industry's earnings estimates for 2022 have decreased 18.6%.
Before we present a few stocks from the industry that you may want to consider, let’s take a look at the industry’s recent stock market performance and valuation picture
Industry Underperform the S&P 500
The Zacks Leisure and Recreation Products industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in this industry have collectively declined 52% over the past year compared with the S&P 500’s fall of 20.2%. The Zacks Consumer Discretionary sector has declined 45.8% in the same time frame.
Valuation
On the basis of forward 12-month price-to-earnings, which is a commonly used multiple for valuing leisure products stocks, the industry trades at 14.67X compared with the S&P 500’s 15.48X and the sector’s 16.41X. Over the past five years, the industry has traded as high as 44.8X and as low as 12.36X, with the median being at 16.72X.
3 Leisure & Recreation Products Stocks to Watch
Vista Outdoor.: This Anoka, MN-based company designs, manufactures, and markets several consumer products in the outdoor sports and recreation markets in the United States and internationally. This Zacks Rank #2 (Buy) company is benefiting from an increase in outdoor activity and shooting sports participation.
Shares of the company have declined 39.2% in the past year. The Zacks Consensus Estimate for 2023 earnings has remained stable over the past seven days.
Academy Sports and Outdoors: Based in Katy, TX, the company through its subsidiaries, operates as a sporting goods as well as outdoor recreational products retailer in the United States. It is benefiting from robust consumer demand across all markets and merchandise divisions, primarily Sports & Recreation. An increase in demand for indoor and outdoor games, bikes, fitness equipment and outdoor cooking bodes well. Partnerships with key national brands, such as Nike, Adidas, Under Armour, Columbia and The North Face, are encouraging.
Acushnet Holdings: This Fairhaven, MA-based company designs, develops, manufactures, and distributes golf products in the United States, Europe, the Middle East, Africa, Japan, Korea, and internationally. This Zacks Rank #3 company is likely to benefit from an increase in demand for golf balls. The company is gaining from a healthy order backlog, strong at-once demand, lean channel inventories and gradually increasing output levels.
The Zacks Consensus Estimate for current-quarter earnings has been revised upward by a cent to $2.80 in the past 70 days. The stock has decreased 6% in the past year.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Academy Sports and Outdoors, Acushnet Holdings and Vista Outdoor
For Immediate Release
Chicago, IL – October 14, 2022 – Today, Zacks Equity Research discusses Academy Sports and Outdoors, Inc. (ASO - Free Report) , Acushnet Holdings Corp. (GOLF - Free Report) and Vista Outdoor Inc. (VSTO - Free Report) .
Industry: Leisure and Recreation
Link: https://www.zacks.com/commentary/1991414/3-leisure-recreation-products-stocks-to-watch-despite-industry-woes
The Zacks Leisure and Recreation Products industry is being hurt by concerns about the slowing U.S. economy. High inflation continues to hurt most industries and leisure and recreational products is no exception. The decline in new boat sales is a concern. However, the rise in fitness products sales due to increasing awareness about health and fitness among people bodes well. The industry participants, which design, market, retail, and distribute products for the outdoor and recreation market, are witnessing robust demand. Stocks like Academy Sports and Outdoors, Inc., Acushnet Holdings Corp. and Vista Outdoor Inc. are likely to benefit from the aforementioned trend.
Industry Description
The Zacks Leisure and Recreation Products industry comprises companies that provide amusement and recreational products, swimming pools, marine products, golf courses, boat repair and maintenance services and other ancillary services, including indoor and outdoor storage, and marine, as well as rental of boats and personal watercraft. Some of the industry participants manufacture outdoor equipment and apparel for climbing, mountaineering, backpacking and skiing.
Some companies also provide connected fitness products and subscriptions for multiple household users. The industry players primarily thrive on overall economic growth, which fuels consumer demand for products. In fact, demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of the Leisure and Recreation Products Industry
Concerns of Slowing U.S. Economy:A slowdown in the economy is likely to hurt the industry. Worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve’s hawkish stance to tame inflation might push the economy into a recession. A high inflation rate continues to hurt the industry.
Despite some moderation from a 40-year high level, inflation in the United States is proving to be much more stubborn than expected. According to the last released Consumer Price Index (CPI) numbers for August, the figure stood at 8.3% — high enough for the Fed to raise its core interest rate by another 0.75% and take its year-to-date increase to 3%. Inflationary cost increases in the areas of labor, compensation, healthcare, freight and rent are leading to higher expenses.
New Boat Sales Decline: New boat sales declined below the pre-pandemic level through July. Per National Marine Manufacturers Association (NMMA) reports, new powerboat sales were 187,000 units in the first seven months of 2022, down 18% from the same period in 2021.
The decline can be primarily attributed to uncertain economic conditions and supply chain turbulence. New pontoon sales decreased 13% in the first seven months of 2022, while new wake sport boats sales were down 11%. Despite the recent concern, per NMMA, 2022 is likely to be a healthy year for the boat industry.
Booming Golf Business:The golf industry has been doing exceptionally well amid the pandemic. Golf is benefiting from an increase in participation of young people. Technology has also been playing a vital role in reshaping the sport. Meanwhile, India and China have popped up as two of the largest emerging golf markets.
Per Golf Datatech and its 2020 National Golf Performance Report, 2020 rounds rose 13.9%, while equipment sales increased 10.1% in 2020. The uptrend continued in 2021, with rounds played increasing 5.5%. While comparing 2021 to 2019 (pre-pandemic), rounds played increased nearly 18%. This gives an indication that the industry has been performing exceptionally well over the past two years.
Zacks Industry Rank Indicates Dismal Prospects
The Zacks Leisure and Recreation Products industry is grouped within the broader Consumer Discretionary sector.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects.
The Leisure and Recreation Products industry currently carries a Zacks Industry Rank #213, which places it in the bottom 15% of more than 251 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since Mar 31, 2022, the industry's earnings estimates for 2022 have decreased 18.6%.
Before we present a few stocks from the industry that you may want to consider, let’s take a look at the industry’s recent stock market performance and valuation picture
Industry Underperform the S&P 500
The Zacks Leisure and Recreation Products industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in this industry have collectively declined 52% over the past year compared with the S&P 500’s fall of 20.2%. The Zacks Consumer Discretionary sector has declined 45.8% in the same time frame.
Valuation
On the basis of forward 12-month price-to-earnings, which is a commonly used multiple for valuing leisure products stocks, the industry trades at 14.67X compared with the S&P 500’s 15.48X and the sector’s 16.41X. Over the past five years, the industry has traded as high as 44.8X and as low as 12.36X, with the median being at 16.72X.
3 Leisure & Recreation Products Stocks to Watch
Vista Outdoor.: This Anoka, MN-based company designs, manufactures, and markets several consumer products in the outdoor sports and recreation markets in the United States and internationally. This Zacks Rank #2 (Buy) company is benefiting from an increase in outdoor activity and shooting sports participation.
Shares of the company have declined 39.2% in the past year. The Zacks Consensus Estimate for 2023 earnings has remained stable over the past seven days.
Academy Sports and Outdoors: Based in Katy, TX, the company through its subsidiaries, operates as a sporting goods as well as outdoor recreational products retailer in the United States. It is benefiting from robust consumer demand across all markets and merchandise divisions, primarily Sports & Recreation. An increase in demand for indoor and outdoor games, bikes, fitness equipment and outdoor cooking bodes well. Partnerships with key national brands, such as Nike, Adidas, Under Armour, Columbia and The North Face, are encouraging.
In the past year, shares of this Zacks Rank #3 (Hold) company have increased 9.4%. The Zacks Consensus Estimate for 2023 has been revised upward by 0.6% in the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Acushnet Holdings: This Fairhaven, MA-based company designs, develops, manufactures, and distributes golf products in the United States, Europe, the Middle East, Africa, Japan, Korea, and internationally. This Zacks Rank #3 company is likely to benefit from an increase in demand for golf balls. The company is gaining from a healthy order backlog, strong at-once demand, lean channel inventories and gradually increasing output levels.
The Zacks Consensus Estimate for current-quarter earnings has been revised upward by a cent to $2.80 in the past 70 days. The stock has decreased 6% in the past year.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.