Shares of Academy Sports and Outdoors (NASDAQ: ASO) gained 9.2% on March 29, after the company delivered stellar fourth-quarter results, massively topping both earnings and revenue estimates.
Investors further cheered as the American sporting goods store chain provided FY2022 earnings guidance well above analysts’ expectations.
Q4 Beat
Notably, Q4 adjusted earnings of $1.61 per share significantly beat analysts’ expectations of $1.38 per share. The company reported earnings of $1.09 per share for the prior-year period.
Further, net sales jumped 13.2% year-over-year to $1.81 billion, and exceeded consensus estimates of $1.77 billion. In addition, on a two-year stack basis, net sales increased 32.0% compared to the fourth quarter of 2019.
The top-line benefitted from the tenth consecutive quarter of positive comparable sales growth of 13.1%.
Similarly, gross margin improved by 110 basis points to 32.3% driven by higher merchandise margins aided by a greater mix of regular price sales, higher retail prices, and a favorable product mix, offsetting increased freight costs.
Notably, FY2021 gross margin improved by 420 basis points to an all-time high of 34.7%.
FY2022 Outlook
Based on expectations of continued strong financial performance and operational improvements, and also accounting for the headwinds of inflation and supply-chain challenges, the company provided guidance for FY2022.
The company forecasts FY22-adjusted earnings in the range of $6.70 to $7.25 per share, far superior to the consensus estimate pegged at $6.14 per share.
Moreover, revenues are forecast to be in the range of $6.56 million to $6.77 billion, versus the consensus estimate of $6.69 billion.
Management Weighs In
Sharing his optimism on the future growth prospects, Academy Sports and Outdoor CEO, Ken Hicks, commented, “Academy is well positioned for substantial long-term growth in its existing stores with our broad assortment of great products from the best national and quality private brands, excellent customer service, expanding omnichannel capabilities, and multiple new store openings in our current and new markets.”
Wall Street’s Take
Following the robust Q4 beat, Wells Fargo analyst Kate Fitzsimons increased the price target on Academy Sports & Outdoors to $62 from $58 and reiterated a Buy rating.
Fitzsimons believes that ASO is an “underappreciated self-help story”. He reasoned his upward revisions to estimates and price targets as he favors the overall “momentum in the category, visibility to sustaining DD margins, and strong FCF generation at just 5-6x P/E.”
Turning to Wall Street, the analyst consensus is also optimistic about Academy Sports & Outdoors, with a Strong Buy rating based on five unanimous Buys. The average Academy Sports and Outdoors price target of $55.80 indicates an upside potential of 41.16%, at the time of writing.
TipRanks’ Smart Score
ASO scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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