Last Update 11 Dec 25

Fair value Increased 2.78%

ASO: Expansion Plans And Private Label Strategy Will Navigate Competitive Headwinds

Analysts have modestly raised their price target on Academy Sports and Outdoors, lifting fair value by about $1.60 to roughly $59.10 as they balance the company’s long term expansion potential and margin accretive private label strategy against intensifying competition and macroeconomic risks.

Analyst Commentary

Bullish analysts view the current valuation as a reasonable entry point relative to Academy Sports and Outdoors long term growth algorithm, with the new target price implying moderate upside as the company executes on its expansion and merchandising strategies.

They see a clear path for Academy to transition from a largely regional footprint to a more nationally recognized sporting goods chain, arguing that disciplined market selection and proven store economics can support steady unit growth without materially diluting returns.

At the same time, more cautious voices highlight that the valuation uplift remains constrained by near term macro and competitive risks, keeping the recommended stance neutral despite acknowledgment of the company’s structural strengths.

Bullish Takeaways

Bullish analysts emphasize the regional to national expansion runway, suggesting that continued store openings in underpenetrated markets can drive mid single digit revenue growth and support the raised fair value estimate.
The margin accretive private label portfolio is seen as a key differentiator that can sustain gross margin resilience and partially offset promotional pressures, underpinning earnings growth and multiple support.
Favorable long term industry tailwinds in outdoor recreation and team sports participation are expected to provide a supportive demand backdrop, helping Academy gain share from smaller local competitors.
Disciplined capital allocation, including measured store growth and inventory management, is viewed as enhancing return on invested capital and justifying a valuation closer to peers with more mature national footprints.

Bearish Takeaways

Bearish analysts caution that negative inventory spread and elevated clearance activity could weigh on near term margins, limiting upside to earnings estimates despite the longer term margin story.
Intensifying competition from national big box chains and e commerce players raises concern about sustained traffic growth and pricing power, which could constrain multiple expansion.
Macro and tariff uncertainty, particularly on imported goods, is seen as a risk to both cost of goods and discretionary consumer demand, adding volatility to the earnings trajectory.
Execution risk around scaling from a regional to a broader national model, including potential cannibalization and higher pre opening costs, may pressure returns and temper how aggressively the market is willing to rerate the shares.

What's in the News

Opened eleven new stores in the third quarter of 2025, bringing the total fleet to 317 locations across 21 states, after adding 24 stores in fiscal 2025 and outlining an additional 20 to 25 planned openings in fiscal 2026 (Key Developments).
Expanded community engagement with new store openings in markets including Russellville, Seguin, Fort Wayne, El Paso, and New Braunfels, pairing grand opening events with local donations, youth shopping sprees, and the creation of more than 1,400 jobs tied to 24 new stores (Key Developments).
Revised full year fiscal 2025 guidance, with net sales now expected between $6.03 billion and $6.20 billion and GAAP EPS between $5.35 and $5.85, narrowing the prior outlook while largely maintaining the earnings range (Key Developments).
Launched an October-long “Brooks Month” promotion, including exclusive Hero Collection colorways and a limited edition Adrenaline GTS 25 Silver Edition, along with a charitable partnership with Marathon Kids and a sweepstakes for myAcademy members (Key Developments).

Valuation Changes

Fair Value has risen slightly from approximately $57.50 to about $59.10, reflecting a modestly more constructive view on the shares.
Discount Rate has increased marginally from about 9.65 percent to roughly 9.87 percent, indicating a slightly higher perceived risk profile or cost of capital.
Revenue Growth has edged down from roughly 6.65 percent to about 6.29 percent, signaling a modestly more conservative top line outlook.
Net Profit Margin has ticked down slightly from around 6.35 percent to about 6.32 percent, implying a nearly unchanged but fractionally softer profitability assumption.
Future P/E has risen meaningfully from about 9.2x to roughly 10.1x, suggesting a higher expected earnings multiple underpinning the updated valuation.

Rapid e-commerce growth and store expansion into underserved markets are enhancing market share, revenue prospects, and operating leverage.
Focused investments in private label, loyalty programs, and supply chain efficiencies are supporting margin stability, customer growth, and improved earnings.
Reliance on higher-income customers, cost pressures, intensified promotions, vendor dependencies, and regional concentration all pose significant risks to revenue growth and profitability.

Catalysts

About Academy Sports and Outdoors

Through its subsidiaries, operates as a sporting goods and outdoor recreational retailer in the United States.What are the underlying business or industry changes driving this perspective?

Strong acceleration in e-commerce (18% growth in Q2 and expanding digital assortment/omnichannel capabilities) positions Academy to capture greater share as consumer spending shifts online, likely supporting outperformance in future revenues and market share.
An ongoing store expansion strategy focused on secondary/tertiary markets with growing populations and suburban migration (20-25 new stores in 2025, robust early comps in new stores) sets up above-peer top-line growth and improved operating leverage as these locations mature.
Investments in private label (strong value proposition, strategic price points, differentiated products) and ongoing negotiations with vendors to offset tariffs are expected to support gross margin stability and even expansion, positively impacting net margins and EPS.
Targeted customer loyalty and marketing programs (over 12 million rewards members, focus on higher-income cohorts trading into Academy) are driving higher spending per customer and improved traffic from desirable demographics, supporting more resilient comp sales and margin profile.
Implementation of supply chain and technology initiatives (RFID rollout, handhelds for inventory/order fulfillment, improved DC operations) are already yielding better in-stock levels and inventory accuracy, with management targeting 100bps SG&A and supply chain savings, which should enhance future earnings and working capital efficiency.

Academy Sports and Outdoors Earnings and Revenue Growth

Academy Sports and Outdoors Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Academy Sports and Outdoors's revenue will grow by 6.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.2% today to 6.4% in 3 years time.
Analysts expect earnings to reach $460.3 million (and earnings per share of $7.48) by about September 2028, up from $370.9 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.2x on those 2028 earnings, up from 8.8x today. This future PE is lower than the current PE for the US Specialty Retail industry at 18.7x.
Analysts expect the number of shares outstanding to decline by 5.24% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.65%, as per the Simply Wall St company report.

Academy Sports and Outdoors Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Academy's strong recent comps and growth are being driven mainly by higher-income customers ($100k+ households), while lower and middle-income cohorts continue to show flat or declining traffic and spending, posing a long-term risk to revenue growth if economic conditions worsen or if these segments don't rebound.
Persistent cost pressures from rising tariffs, labor inflation, and higher e-commerce fulfillment/shipping costs are eroding gross margins and compressing net earnings, and these headwinds may accelerate if wage or tariff environments deteriorate further.
The promotional environment is intensifying year-over-year, and Academy is seeing sharper customer aggregation around promotional events, suggesting erosion of pricing power and a risk to both gross margins and sustained market share gains.
Dependence on brand partnerships (Nike, Jordan, Adidas, etc.) exposes the company to risks from vendor direct-to-consumer shifts and loss of exclusivity or favored access, which could limit future product variety, reduce competitive differentiation, and put downward pressure on revenues.
Heavy regional market exposure (Southeast, South Central U.S.) and store expansion strategy make Academy vulnerable to natural disasters (as shown by recent floods), regional economic cycles, and demographic shifts away from traditional team sports, all of which could negatively impact long-term revenue and store productivity.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $57.5 for Academy Sports and Outdoors based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $47.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.2 billion, earnings will come to $460.3 million, and it would be trading on a PE ratio of 9.2x, assuming you use a discount rate of 9.6%.
Given the current share price of $48.76, the analyst price target of $57.5 is 15.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Academy Sports and Outdoors?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

E-commerce Acceleration And Suburban Store Expansion Will Spark Retail Transformation