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HomeValue stockGrowth & Value Investing: Academy Sports and Outdoors (ASO)

Growth & Value Investing: Academy Sports and Outdoors (ASO)

Stock Analysis based on Fundamentals:

Company Overview:

  • This $6 billion company aims to lead the sports and outdoors retail sector across 18 states through its 282 stores, offering both growth opportunities and value-based pricing.
  • The company’s outdoor division supplies camping gear, fishing equipment, and hunting products, meeting the diverse needs of outdoor enthusiasts.
  • The company focuses on affordability, so everyone can enjoy activities no matter their budget. We offer a wide range of products, including outdoor gear, tailored to each store’s need.

Why invest in Academy Sports and Outdoors (ASO)?

  • Their long-term strategic plan aims to expand the store base by over 50% in existing and new markets through the opening of 160-180 new stores.
  • The company’s long-term goals involve achieving net sales exceeding $10 billion and maintaining a net income margin of 10%.
  • Additionally, it aims to sustain an adjusted EBIT margin of 13.5% and achieve a ROIC of 30%.
  • During the fiscal year 2023, the company generated $536 million in cash from operating activities, with approximately $200 million allocated primarily towards growth initiatives.
  • The company plans to fully self-fund its capital expenditures, with an expected expenditure of approximately $1.5 billion over the next five years.
  • Currently, the company exhibits strong fundamentals and trades at an attractive valuation, with a price-to-earnings (P/E) ratio of around 9 and a price-to-cash-flow ratio of 8.37.
  • Due to its plans and current valuations, this company presents an opportunity for both growth and value investing strategies.

Risk Factors:

  • The company also faces intense competition from other industry players such as Dick’s Sporting Goods and Nike.
  • The company, operating in the retail sector, is subject to the impacts of economic conditions.

Chart:

= The company is currently down approximately 23% from its all-time high and is trading close to its 200-day simple moving average (SMA).

= If it breaches its 200-day simple moving average (SMA), there’s a possibility that it may experience further downward movement.

= This could potentially provide an opportunity to buy the stock at lower levels, with a margin of safety.

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