Academy Sports & Outdoors: Upgrade To Buy On Better Fundamental Outlook
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May Investing Ideas697 FollowersFollow5ShareSavePlay(9min)CommentsSummaryAcademy Sports & Outdoors (ASO) is upgraded to Buy as core business resilience, favorable consumer mix shift, and new-store momentum drive a healthier growth profile. Q3 net sales grew 3% y/y to $1.38B, with gross margin expanding 170 bps to 35.7% and adj. EPS up 16.3% y/y. High-income households now comprise ~40% of sales, with premium-brand partnerships fueling traffic and private label adoption, creating a sticky, higher-margin customer base. New stores opened since 2022 are outperforming, contributing ~50 bps to total comp in Q3, supporting ongoing unit growth and comp sales acceleration. MoMo Productions/DigitalVision via Getty Images Investment overview I wrote about Academy Sports & Outdoors (ASO) previously with a hold rating stance because I struggled to see a clear catalyst that would cause an upwards re-rating. My view hasThis article was written byMay Investing Ideas697 FollowersFollowI am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Technical investing [historical charts analysis], and to some extend momentum investing [share price reaction post earnings etc.]. Over the years, I have used the positive aspects of each approach to hone my investing process. The reason to write on SeekingAlpha is to use this platform as a tracker for my investing ideas performance, and also to connect with like-minded investors that have the same investing interest.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow is ASO's consumer mix evolving, and what does it mean for margins?High-income households now represent ~40% of sales, up high single digits y/y, shifting the mix toward less price-sensitive, higher-margin customers and supporting margin expansion.Recommended For You