[ad_1]
Physical sporting goods retailers such as Sports Authority, Models and Olympia Sports were thought to have gone out of business years ago.
But academy sports (yes 0.37%) It hasn’t received a memo–it’s not only alive and kicking, it’s beating the returns of the wider market. NASDAQ Compositehas fallen about 24% over the same timeframe. on the other hand, Dow Jones Industrial Average When S&P 500 Nasdaq isn’t the only tech market outperforming academy sports, as it dropped 4% and 13% over the period.
And it’s not that this recent performance is out of the ordinary: Academy Sports has made over 300% profit since its IPO in 2020. Even after the 2022 surge, Academy Sports still looks like a strong buy am. Here’s why:
Image Source: Getty Images
What is Academy Sports?
As the name suggests, Academy Sports is a sporting goods retailer. The Texas-based company has been around since his 1938 and now has 268 locations in his 18 states, mostly in the southeastern United States. We sell sporting goods, apparel, footwear, and equipment for outdoor activities such as hunting, fishing, and camping.
Our stores are spacious, averaging 70,000 square feet, giving Academy plenty of room to stock our extensive range of products. Academy offers products from popular premium brands. We also offer our own private brands such as Magellan, BCG and Freely at affordable prices.
Mission of the Academy
From my perspective as an investor, companies need a ‘reason to exist’. The academy’s mission statement is ‘fun for all’ and as such, it aims to make sports and outdoor activities fun and accessible to all. The company offers this value by offering a kid’s bike for $60 and a private label hat or his t-shirt for his $4.99. The Academy also differentiates itself by its local merchandising focus, such as offering crawfish cookers in Louisiana and smokers in Texas.
extension of the deck
Academy Sports has its sights set on further expansion across the United States. The company will open 10 of his new stores in 2022, making its first forays into states such as Virginia and West Virginia. We aim to increase the number of stores by about 30% (80 to 100 new stores) by 2026.
Retailers plan to achieve this growth in “infill” locations in markets they already have a presence in, expand into adjacent markets, and enter entirely new geographies.
According to the Academy, with a $20 million annual opportunity for each new store (which seems reasonable based on average store sales today), the expansion could add up to $2 billion in annual revenue. must. The company’s current annual $6 billion.
Why is Academy stock so cheap?
Academy is an attractive growth stock, but it’s also a great value stock. Even after its 2022 resurgence, the stock is still trading at less than 8x P/E, with a forward P/E of only about 7x, much cheaper than the broader market. is about half a multiple of , which looks too cheap.
Academy Sports also looks like a buy from a price-to-earnings ratio (PEG) standpoint. This metric accounts for a stock’s earnings growth when evaluated by dividing the price earnings ratio by the earnings growth ratio. Investors typically consider stocks with a PEG ratio of less than 1 to be undervalued, so Academy Sports looks good in this regard, where he has a PEG ratio of 0.7.
Investors associate this market with a number of bankrupt sports retailers, so we expect Academy’s multiples to be low, but as mentioned above, Academy is looking to differentiate itself and carve out a true ‘reason for existence’. I came.Investors may worry that Amazon Finally eating the Academy’s lunch. But Academy has coexisted with Amazon for a long time and hasn’t stopped growing the business, so the sporting goods retailer deserves a little more recognition from the market.
There is also concern that increased interest in outdoor activities during the COVID pandemic has temporarily boosted the Academy’s results. While this has certainly benefited the academy, it’s also possible that you’ll find that many of these new outdoor sports participants like the new hobbies they started around this time of year and continue to do so.
Even if some of them eventually ditch their new hobby, the total customer base should be higher than it was pre-pandemic. has increased by 30%. Statista expects the global sports and outdoor market to grow at his CAGR of just over 10% through 2027. There is still plenty of room for growth.
new dividend stocks
Additionally, Academy Sports is a dividend stock. A 0.5% dividend yield might not be much to write home about, but the company is launching this dividend in his 2022 with a minimal payout ratio and plenty of room to grow over time. .
Academy looks like a compelling combination of growth and value going forward. The company has carved out a compelling niche with its localized focus and the value it provides to its customers. The company’s expansion plans offer a viable path to long-term earnings growth, and the stock looks incredibly cheap with earnings less than eight times his.
All of this means that Academy Sports looks like a strong buy that investors can hold in their portfolios for the long term.
[ad_2]
Source link
