Academy Sports and Outdoors, Inc. (ASO): what the price assumes

boothcheck covers Academy Sports and Outdoors, Inc. (ASO) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/ASO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Academy runs 322 large-format stores averaging roughly 70,000 square feet, and 117 of them sit in Texas, so this is a regional chain with a national growth plan rather than a national chain with regional strength.
• Fiscal 2025 growth came entirely from new boxes: the 10-K reports that the 24 stores opened that year generated $142.8 million of net sales, including e-commerce, against a total net sales increase of $120.0 million, or 2.0% for the company, which means the pre-existing fleet went backwards.
• That turned in the spring: first-quarter fiscal 2026 comparable sales rose 2.9% with total net sales up 6.7% and e-commerce up 17.4%, and whether that holds through the back half is the thing to watch.

Bull Case

Start with the argument against owning this. The brands Academy sells are increasingly happy to sell without it. The 10-K states the problem in its own risk section: vendors increasingly sell their products directly to customers or through broadened or alternative distribution channels, such as department stores. Add to that a store base concentrated to a degree few retailers would choose, with 117 of 322 locations in Texas alone, and a customer whose spending on sporting goods is discretionary by definition. A skeptic does not need to work hard here.

Now look at what the fleet actually did. First-quarter fiscal 2026 net sales rose 6.7%, comparable sales rose 2.9% and e-commerce rose 17.4%. Comparable sales are the number that cannot be manufactured by opening stores, and they turned positive. A chain being disintermediated by its own suppliers does not usually post rising traffic-driven sales in its existing boxes while its digital channel grows at three times that rate.

The reason the format works is stated plainly in the filing and is easy to underrate: the company believes it sits in a sweet-spot of consumer demand, offering a broad, value-based assortment of sporting goods and outdoor recreation products, so our customers can participate and have fun, no matter their budget. Value-based assortment in a 70,000 square foot box is a different business from premium specialty retail. When a brand goes direct, it goes direct at full price. The customer who wants a functional bat, a decent pair of running shoes and a cooler in one trip is not the customer a brand's own website is designed to serve.

The economics are better than the cohort suggests. Academy converts 7.2% of revenue into operating profit. DKS converts 6.1%, AEO 6.0%, SIG 5.6%, VSCO 4.8% and LZB 6.1%; only ROST at 12.2% and GAP at 8.4% do better in this group. For a retailer with a hardgoods-heavy mix, that is a good result, and the filing explains the mix mechanic behind it: our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions. Apparel and footwear together are 47% of revenue, so the mix lever is real and available.

Capital allocation has been unusually aggressive, and it shows up where it cannot be faked. The share count has fallen about 7.1% a year over the four years to May 2026, which is close to a quarter of the company retired. It has been done from a modest balance sheet rather than a stretched one: net funded borrowings of 145.5 million dollars sit against trailing operating income of 416.7 million dollars, roughly 0.35 times operating profit, with 337.8 million dollars of liquid assets on hand and no cash burn. The honest concession is that fiscal 2025's entire sales increase came from new stores while the existing base gave ground. The counter is the first quarter of fiscal 2026, which is the first evidence in a while that the base can carry its own weight.

Bear Case

Everything the equity story now promises depends on a building programme. At its April Analyst Day the company laid out a five-year plan to reach roughly $8 billion of revenue, on the back of about 125 new store openings, e-commerce rising to 15% of sales, and net income equal to about 7% of sales, which management translated into around $9 of earnings per share by fiscal 2031. Strip away the packaging and there is one load-bearing assumption: that a store opened in a market Academy is not already known in performs like a store in Texas.

The filing itself is the best witness against that. It warns that New stores in new markets, where we are less familiar with the target customer and less well-known by the target customer, may face different or additional risks and increased costs compared to stores operated in existing markets, and separately that our operating margins may be impacted in periods in which incremental expenses are incurred as a result of upcoming new store openings. Building 125 stores is therefore a multi-year commitment to carry pre-opening costs against a base whose recent performance has been flat.

Flat is generous. In fiscal 2025 the 24 stores opened during the year generated $142.8 million of net sales, including e-commerce, while the whole company's net sales rose $120.0 million, or 2.0%. The arithmetic is unforgiving: new boxes contributed more than the entire increase, which means everything else shrank. A growth plan built on adding stores works only if the stores already open hold their ground, and for a full year they did not.

Two external pressures sit on top of that. The first is that the suppliers are competitors: vendors increasingly sell their products directly to customers or through broadened or alternative distribution channels, and every year that shift continues, the assortment advantage of a big box narrows. The second is the consumer, where the 10-K flags that spending patterns may be long-lasting or structural rather than temporary and could be amplified by pricing actions taken in response to higher costs or tariffs, which may cause consumers to reduce discretionary spending. Sporting goods is the category people postpone first.

The balance sheet looks light until you count the buildings. Funded borrowings net of cash are 145.5 million dollars, which is nothing. But the obligations behind 322 leased large-format boxes bring the total closer to 1.6 billion dollars once lease commitments are included, and that figure behaves like fixed cost rather than like flexible capital. Rent is owed whether or not the store makes its plan, and the term borrowings require quarterly principal payments through September 2027 alongside it.

Here the bear has to concede something unusual: the price already agrees. The market is valuing the whole business at about 11 times its operating profit, below what even a decline of five percent a year in that profit would justify. The implied steady-state operating margin embedded in the price is about 2.1% against the 7.2% the business earns today. So this is not a warning that the shares are expensive. It is the observation that the cheapness is doing a job, and the job is discounting a fleet that has to keep spending capital to stand still.

Valuation

Most valuations require something to go right. This one requires something to go wrong, and less slowly than the market expects. The whole business is being valued at about 11 times its operating profit, a level below what even a decline of five percent a year in that profit would justify. That is a bound rather than a solved figure, and the bound is the point.

Push it one step further and the implication is stark. The operating margin consistent with today's quote works out at roughly 2.1% over a long horizon, against the 7.2% the company earns now. In other words the market is priced for the business to give back around two thirds of its profitability and to keep it given back. Nothing in the recent record points that way; first-quarter fiscal 2026 comparable sales were positive and the mix lever toward apparel and footwear is still available. But that is what the arithmetic embeds, and a buyer should know they are being paid in advance for a deterioration rather than asked to fund an expansion.

The standard methods agree with each other unusually cleanly, and all of them land above where the shares trade. The earnings-power approach, which capitalises a five-year average of operating income and assumes no growth whatsoever, finishes well above. So does the blended peer-multiple lens, which applies a mix of the sector reference and the company's own trailing multiple to trailing earnings per share of $5.66. Even the most conservative of the forward approaches, which carries the current operating multiple flat rather than expanding it, comes out marginally above. There is no family here reaching down to defend the current level as fair; they all reach up.

Against the cohort the position is consistent. Academy converts 7.2% of revenue into operating profit, ahead of DKS at 6.1%, AEO at 6.0%, SIG at 5.6% and VSCO at 4.8%, and behind ROST at 12.2% and GAP at 8.4%. On the multiple the market pays, however, it sits in the lower half of the same group. Better profitability than most of the cohort combined with a cheaper multiple than most of the cohort is the definition of a value read, and it is also the definition of a market that does not believe the profitability lasts.

Solvency is not the constraint here, which matters because it removes the usual reason a cheap retailer stays cheap. Funded borrowings net of cash come to 145.5 million dollars against trailing operating income of 416.7 million dollars, roughly 0.35 times operating profit, with 337.8 million dollars of liquid assets and no cash being consumed. Counting the lease obligations behind 322 large-format stores lifts total commitments closer to 1.6 billion dollars, which is the right figure to hold in mind when thinking about fixed costs in a downturn, though it is not funded debt. Meanwhile the share count has fallen about 7.1% a year over the four years to May 2026. A business retiring its own equity that fast at this multiple is compounding per-share value even if the enterprise does nothing at all, which is the quiet argument the methods are making in numbers.

Catalysts

The strategy was reset in public this spring. On April 7, 2026 the company held an Analyst Day laying out a five-year plan: revenue of roughly $8 billion, about 125 new store openings, e-commerce penetration rising to 15% of sales, and net income equal to about 7% of sales, which management framed as around $9 of earnings per share by fiscal 2031. Store growth was named the primary lever. For context on the pace that implies, the 10-K records 24 stores opened in fiscal 2025 and a plan to open 20 to 25 stores in fiscal year 2026.

The first quarter then delivered better than the preview. Reporting on June 9, 2026, Academy posted a 6.7% rise in net sales, comparable sales up 2.9%, e-commerce up 17.4% and diluted earnings per share up 17.6% year over year, and raised the low end of its full-year fiscal 2026 guidance on the strength of it. Comparable sales had been guided to a range of 2% to 3% ahead of the print, so the result landed at the top of the company's own expectation rather than beyond it.

The second-quarter report, due in the autumn, carries more information than a typical mid-year print. Summer is when the outdoor and sports-and-recreation divisions do their volume, and those are the hardgoods categories that dilute profitability when they lead the mix. Three things are worth separating in that release: whether comparable sales stayed positive without the help of the spring calendar, how the new stores opened this year are performing against the fleet, and whether the shift toward apparel and footwear that supports profitability is continuing.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• DKS (DICK'S Sporting Goods, Inc.)
• FY2025 10-K: …for a prolonged period of time. Intense competition in the sporting goods industry and in retail could limit our growth and reduce our profitability. The market for sporting goods retailers is highly fragmented, intensely competitive, and continually evolving. We compete with retailers from multiple categories and in…
• FY2025 10-K: …costs; changes in consumer demand for products in certain categories and consumer lifestyle changes; intense competition in the sporting goods industry; potential reputational harm; the overall success of our strategic plans and initiatives; the repositioning of our real estate portfolio, including plans to open…
• GAP (GAP, INC)
• FY2025 10-K: …Comp Sales driven by Old Navy Global and Gap Global. Cost of Goods Sold and Occupancy Expenses ($ in millions) Fiscal Year 2024 2023 Cost of goods sold and occupancy expenses $ 8,859 $ 9,114 Gross profit $ 6,227 $ 5,775 Cost of goods sold and occupancy expenses as a percentage of net sales 58.7 % 61.2 % Gross margin…
• FY2025 10-K: …our President and Chief Executive Officer. The CODM reviews measures of segment profit or loss by comparing budgeted versus actual and forecasted results, for purposes of assessing performance, allocating resources, and making decisions. The measure of segment assets is reported on the Consolidated Balance Sheets in…
• ROST (Ross Stores, Inc.)
• FY2025 10-K: …for our associates and their dependents. Competition We believe the principal competitive factors in the off-price retail apparel and home fashion industry are offering significant discounts on brand name merchandise, offering a well-balanced assortment that appeals to our target customers, and consistently providing…
• FY2025 10-K: …and market share. 10 Competitive pressures in the apparel and home-related merchandise retailing industry are high. The retail industry is highly competitive and the marketplace is fragmented, as many different retailers compete for market share by utilizing a variety of store and online formats and merchandising…
• AEO (American Eagle Outfitters, Inc.)
• FY2025 10-K: …financial condition and results of operations. In addition, we operate in a competitive labor market, in which wage actions by other retailers and companies may require us to increase salary and wage rates, bonuses and other incentives in order to attract and retain talented employees across all of our retail store,…
• FY2025 10-K: …of climate change, the availability of import quotas, transportation disruptions and foreign currency exchange rate fluctuations, could adversely affect our business and cause our results of operations to fluctuate. We operate in a highly competitive industry, and we face significant pricing pressures from existing…
• SIG (SIGNET JEWELERS LIMITED)
• FY2025 10-K: …margin include pricing, promotional environment, changes in merchandise costs, changes in non-merchandise components of cost of sales (as described above), changes in sales mix, foreign exchange, and the economics of services such as repairs and extended service plans. The price of diamonds varies depending on their…
• FY2025 10-K: …and Jared Vault); Banter by Piercing Pagoda; Diamonds Direct; Rocksbox; and Digital brands, James Allen and Blue Nile. ◦ In Canada, the segment operates under the Peoples brand (Peoples Jewellers). • The International reportable segment had 263 locations in the UK and Republic of Ireland as of February 1, 2025, and…
• SBH (SALLY BEAUTY HOLDINGS, INC.)
• FY2025 10-K: …future periods. Operational, Strategic and General Business Risks The beauty products retail and distribution industry is highly competitive and is consolidating. We face significant competition from other beauty stores and outlets, salons, mass merchandisers, online retailers, drug stores and supermarkets. The…
• FY2025 10-K: …of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our - 31 - comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers, as the…
• VSCO (VICTORIA'S SECRET & CO.)
• FY2025 10-K: …We may be impacted by our ability to attract, develop and retain qualified associates and manage labor-related costs. We believe one of our key competitive advantages is providing a positive, engaging and satisfying experience for each customer, which requires us to have highly trained and engaged associates. Our…
• FY2025 10-K: …of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time title of the merchandise passes to the partner. Costs of Goods Sold, Buying and Occupancy The Company's costs of…
• LZB (LA-Z-BOY INCORPORATED)
• FY2025 10-K: …point increase in SG&A expense as a percentage of sales in fiscal 2025 compared with fiscal 2024 driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment. ◦ SG&A expense as a percentage of sales increased in fiscal 2025 compared with fiscal 2024 due…
• FY2025 10-K: …dealers, and a wide cross-section of other independent retailers. Retail Segment . Our Retail segment consists of one operating segment comprised of our 203 company-owned La-Z-Boy Furniture Galleries ® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other home…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.