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The company’s earnings have missed the Zacks Consensus Estimate in the trailing three out of four quarters, with the average miss being 7.3%.
Image Source: Zacks Investment Research
The Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) is pegged at $2.03, down 2.9% year over year. In the past 30 days, earnings estimates for current have witnessed downward revisions of 1.5%. The consensus mark for revenues is pegged at $1.57 billion, indicating a 0.7% year-over-year decrease.
What the Zacks Model Unveils
Our proven model doesn't conclusively predict an earnings beat for ASO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of -4.06%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell) at present.
Academy Sports' performance in second-quarter 2024 is likely to have been hurt by a challenging macroeconomic environment that is impacting its customer base. A decline in discretionary spending by middle and low-income consumers is likely to have hurt the company. Additionally, ASO's underperforming categories like Outdoor, are also contributing to the weaker performance.
Dismal comps are also likely to have hurt the company’s top line. The Zacks Consensus Estimate for comps suggests a decline of 4.2%. The consensus estimate for Apparel, Outdoors, Footwear and Sports and Recreational revenues is pegged at $424 million, $424 million, $293 million and $362 million, down 4.9%, 1.9%, 4.9% and 7.7%, year over year, respectively.
ASO’s margins in the quarter are likely to have been impacted by a shift in sales toward lower-margin hard goods and increased promotional activities. Given the reliance on promotional activity to drive sales during key periods, it is cautious about concerns related to margin stability in the upcoming periods.
However, product innovation and expansion efforts are likely to have aided the performance. An increase in demand for indoor and outdoor games, bikes, fitness equipment and outdoor cooking bodes well. Its focus on omnichannel improvements and digital enhancements, along with strengthening its inventory position (with seasonally appropriate products) to ensure its growth momentum, also bodes well.
Price Performance & Valuation
This year, ASO stock has underperformed the industry and the S&P 500. Year to date, the stock has declined 17.4% compared with the industry’s decline of 1.1%. However, other major players have also seen declines — Sportsman's Warehouse Holdings, Inc. (SPWH - Free Report) is down 47.2%, DICK'S Sporting Goods, Inc. (DKS - Free Report) is up 62.8% and On Holding AG (ONON - Free Report) is down 65.3%.
Image Source: Zacks Investment Research
The company is currently valued at a discount compared with the industry on a forward 12-month P/E basis. ASO’s forward 12-month price-to-earnings ratio stands at 7.91, significantly lower than the industry’s ratio of 27.82 and the S&P 500's ratio of 21.73.
Image Source: Zacks Investment Research
Investment Thoughts
Based on current economic challenges, operational pressures and competitive landscape, ASO appears to be facing significant challenges that could weigh on its performance in the near term. Investors might want to avoid the stock at this time, particularly until there are clearer signs of improvement in the company’s earnings trajectory and macroeconomic conditions.
Image: Bigstock
Academy Sports (ASO) Before Q2 Earnings: To Buy or Not to Buy?
Academy Sports and Outdoors, Inc. (ASO - Free Report) will likely report a decline in the top and the bottom line when it reports second-quarter 2024 results.
The company’s earnings have missed the Zacks Consensus Estimate in the trailing three out of four quarters, with the average miss being 7.3%.
Image Source: Zacks Investment Research
The Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) is pegged at $2.03, down 2.9% year over year. In the past 30 days, earnings estimates for current have witnessed downward revisions of 1.5%. The consensus mark for revenues is pegged at $1.57 billion, indicating a 0.7% year-over-year decrease.
What the Zacks Model Unveils
Our proven model doesn't conclusively predict an earnings beat for ASO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of -4.06%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Influencing Q2 Performance
Academy Sports' performance in second-quarter 2024 is likely to have been hurt by a challenging macroeconomic environment that is impacting its customer base. A decline in discretionary spending by middle and low-income consumers is likely to have hurt the company. Additionally, ASO's underperforming categories like Outdoor, are also contributing to the weaker performance.
Dismal comps are also likely to have hurt the company’s top line. The Zacks Consensus Estimate for comps suggests a decline of 4.2%. The consensus estimate for Apparel, Outdoors, Footwear and Sports and Recreational revenues is pegged at $424 million, $424 million, $293 million and $362 million, down 4.9%, 1.9%, 4.9% and 7.7%, year over year, respectively.
ASO’s margins in the quarter are likely to have been impacted by a shift in sales toward lower-margin hard goods and increased promotional activities. Given the reliance on promotional activity to drive sales during key periods, it is cautious about concerns related to margin stability in the upcoming periods.
However, product innovation and expansion efforts are likely to have aided the performance. An increase in demand for indoor and outdoor games, bikes, fitness equipment and outdoor cooking bodes well. Its focus on omnichannel improvements and digital enhancements, along with strengthening its inventory position (with seasonally appropriate products) to ensure its growth momentum, also bodes well.
Price Performance & Valuation
This year, ASO stock has underperformed the industry and the S&P 500. Year to date, the stock has declined 17.4% compared with the industry’s decline of 1.1%. However, other major players have also seen declines — Sportsman's Warehouse Holdings, Inc. (SPWH - Free Report) is down 47.2%, DICK'S Sporting Goods, Inc. (DKS - Free Report) is up 62.8% and On Holding AG (ONON - Free Report) is down 65.3%.
Image Source: Zacks Investment Research
The company is currently valued at a discount compared with the industry on a forward 12-month P/E basis. ASO’s forward 12-month price-to-earnings ratio stands at 7.91, significantly lower than the industry’s ratio of 27.82 and the S&P 500's ratio of 21.73.
Image Source: Zacks Investment Research
Investment Thoughts
Based on current economic challenges, operational pressures and competitive landscape, ASO appears to be facing significant challenges that could weigh on its performance in the near term. Investors might want to avoid the stock at this time, particularly until there are clearer signs of improvement in the company’s earnings trajectory and macroeconomic conditions.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.