Academy Sports & Outdoor (ASO) is the IBD Stock Of The Day, as Americans, now armed with stimulus cash, should continue to enjoy the outdoors even after the pandemic subsides. ASO stock is near a buy point after maintaining key support.
The Katy, Texas-based company operates nearly 260 stores across 16 states, mainly in the southern U.S. Academy’s product assortment focuses on key categories of outdoor, apparel, footwear, and sports and recreation.
After blowout earnings, the outlook for Academy appears strong in the year ahead, even as it comes up against tougher comparisons.
This year, massive stimulus spending is driving favorable trends, while the company “sees the hobbies formed during the Covid-19 as sticky,” JPMorgan analyst Christopher Horvers wrote in an ASO stock note to clients April 19.
He added that the company believes it can keep growing sales in 2021 vs. tough comps, as organized sports resume and kids return to school in the fall.
“Indeed, from a category perspective, ASO noted that almost all categories are back with team sports ramping up in the spring and consumers starting to buy licensed apparel while categories like fishing and home gym equipment that saw growth last year remain strong,” he wrote. “Moreover, ASO is not seeing any signs of pull-forward in big ticket items like trampolines or pools.”
Shares fell 2.4% to 30.43 on the stock market today after the company announced a secondary stock offering, but slashed losses despite a plunging market.
Shares have also found support at the 21-day line after bottoming not too far from the 10-week line in March.
On March 30, the company reported fourth-quarter earnings skyrocketed 374% to $1.09, crushing views for 62 cents. Sales grew 17% to $1.6 billion, in line with views.
Comparable sales increased 16%, driven by strong demand but particularly sports and recreation.
E-commerce sales grew 61%, as the company focused on its online presence and curbside pickup services. The gross profit margin rate increased 420 basis points to 31%.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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