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Why Did Academy Sports and Outdoors Gain 9%?
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Why Did Academy Sports and Outdoors Gain 9%?

Story Highlights

Academy Sports and Outdoors reported upbeat Q1 results, topping both earnings and revenue estimates. Despite the beat, management trimmed its FY2022 outlook.

Academy Sports and Outdoors (ASO) shares jumped almost 9% on June 7 after the company delivered blowout first-quarter earnings.

However, citing ongoing macroeconomic concerns, ASO, which is one of the leading full-line sporting goods and outdoor recreation retailers in the U.S., muted its FY2022 sales guidance slightly below analysts’ expectations.

Q1 Beat

The company reported stellar quarterly earnings of $1.73 per share, significantly higher than analysts’ estimates of $1.41 per share. However, it was lower than the earnings of $1.89 per share reported for the prior-year period.

Meanwhile, net sales declined 7% to $1.47 billion compared to the prior-year period but outpaced the Street’s estimate of $1.45 billion.

The revenue decline is attributed to lower comparable sales, which dropped 7.5% due to the lapping effect of comparable sales that were boosted by the government stimulus in the first quarter of 2021.

Revised FY2022 Outlook

Based on the ongoing macroeconomic challenges, the company revised its guidance for fiscal 2022.

The company now forecasts adjusted earnings in the range of $6.55 to $7.25 per share, compared to the previously guided range of $6.70 to $7.25, and the consensus estimate is pegged at $6.93 per share.

Further, total net sales are forecast to be in the range of $6.43 billion to $6.63 billion, lower than the consensus estimate of $6.66 billion.

CEO’s Comments

Academy Sports and Outdoors CEO, Ken Hicks, commented, “In April, we opened our first new store in over two years and are excited and proud of its early performance. We expect to open at least eight new stores in 2022 as part of our plan to open 80 to 100 stores over the next five years.”

He further added, “Looking ahead, the team is focused on executing our 2022 priorities which will help drive long-term growth and sustainable profitability.”

Wall Street’s Take

Turning to Wall Street, analysts are optimistic about Academy Sports & Outdoors, with a Strong Buy rating based on seven unanimous Buys. The average Academy Sports and Outdoors price target of $58.50 indicates an upside potential of 51.16%.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on ASO stock, compared to a sector average of 68%.

Conclusion

ASO reported upbeat earnings per share (EPS) and revenues during the current quarter, which is commendable, especially when other stocks are reporting big misses due to global uncertainties.

Additionally, the company returned $95 million to shareholders through share repurchases and dividend pay-outs while also announcing a new three-year, $600 million repurchase program.

Despite the stellar beat and impressive pay-outs, management chose to be cautious on its short-term outlook, which is prudent given the current global scenario.

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