Chart last updated EOD 12/10 (Taken from Finviz ASO quote page)
There should be a couple PDFs attached at the very bottom that I downloaded from Fidelity giving a lot of good information. (Last Updated: 12/4)
NOTE: This isn’t a Big 5 dumpster fire / short squeeze / reddit play, this is a value play on an 83 year old quality growth company that has been doing extremely well since their IPO back in October 2020.
CONFIRMED: Academy plans to release its third quarter fiscal 2021 financial results before the market opens on Friday, December 10, 2021. Academy will host a live conference call that day at 11:00 a.m. Eastern Time to discuss the financial results.
Academy Sports & Outdoors (ASO) https://www.academy.com/ - is an American sporting goods store chain. It has corporate offices in Houston, TX. For 74 years it was a privately held company, until its May 2011 acquisition by KKR. In October 2020 it was listed on the Nasdaq.
As of 2020 Academy has 259 store locations across 16 (mostly southern) states. After going public, a continued national expansion plan was laid out calling for 8-10 stores per year starting in 2022.
Academy’s roots remain in Texas, and the epicenter of the company’s business always has been the greater Houston area. As it has expanded beyond its home base, Academy has sought “hot-market” locales, places that from market analysis offered the promise of high-volume sales. The result has been that it has never had to close one of its new stores, all of which have been profitable since their first day of operation.
Quickly comparing Academy to some other public sporting goods stores:
(Market Cap / PE Ratio)
Dick’s Sporting Goods (DKS): 12.42B / 11.55
Academy Sports + Outdoors (ASO): 4.69B / 9.05
Sportsman’s Warehouse (SPWH): 765M / 8.84
Big 5 Sporting Goods (BGFV): 576M / 5.60
Current shares outstanding is about 93.5M. I’m having a hard time finding reliable float figures, sources show anywhere from 84M to 92M. There are around 8-12M shares shorted depending on which source you use, equating to around 11-13% of the float, with the average short price being $40.26.
Since their IPO in October 2020, every quarter they have crushed earnings estimates. The private equity firm KKR (that has owned them since 2011) sold chunks of their shares over the past year (I believe after each earnings) with the last 20% (18.65M shares) being sold back on Sept 17th, 2021, and simultaneously Academy announced they would repurchase 4.5M of those shares (likely in an attempt to limit the fallout in share dilution and decrease in stock price).
Currently institutions & Mutual Funds / ETFs hold 97.8% of the shares.
Listed below are the previous earnings dates, closing share price for the day, EPS estimate, and EPS Actual.
10/01/2020 - $13.00 (IPO)
12/10/2020 - $17.49 / $0.36 / $0.91
03/30/2021 - $26.88 / $0.53 / $1.09
06/08/2021 - $39.65 / $0.84 / $1.89
09/09/2021 - $44.07 / $1.42 / $2.34
12/10/2021 - $??.?? / $1.03 / $?.?? Q3 Earnings Date
Share price as of market close on 11/19/2021 was $50.14
Earnings back in September showed a sharp decline in stock price the day before (8th) at open with a slow recovery during the day and through AH/PM. Same pre-market when earnings were announced (9th), again the price declined sharply (45.72 - 41.51), however the stock price recovered and closed at $44 for the day, and continued climbing in price for the next 4 trading days peaking at $47.65 until the announcement made below.
It was announced on the 15th about the 18.65M share offering (KKR receiving the proceeds from that sale and would be the last of their stake in the company), along with the simultaneous 4.5M share buyback. Obviously the stock price dropped immediately some on that news, and then the stock also dropped more on the 17th when the transaction occurred, ultimately bring the price around the $42-43 range for days after.
October was a rough month for all stocks, the stock hit a low of $38.70 on Oct 1st, and continued to trade in the low $40’s for most of the month until Oct 21st when it started to climb, and on Nov 3rd the stock price jumped $4 and has continued on an upward trend since.
Most recent ratings of the stock:
Nov-15-21 Refinitiv/Verus Buy
Nov-13-21 Zacks Outperform
Nov-01-21 ISS-EVA Buy
Oct-26-21 Wedbush Outperform $54
Oct-19-21 Oppenheimer Outperform $50
Sep-10-21 UBS Buy $48 → $52
Sep-10-21 JP Morgan Overweight $50 → $55
Sep-10-21 Guggenheim Buy $45 → $52
Sep-10-21 Credit Suisse Outperform $44 → $53
Sep-10-21 BofA Sec Buy $50 → $60
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Bear Case: Supply chain issues, product cost increases, COVID, employment, all the usual that we’ve heard for retail. Share dilution if they need money (unlikely). Also the obligatory, “It’s already priced in”.
Bull Case: KKR has 100% sold their stake (as of 9/17) and is out of the picture so no more expected share dilutions. If earnings are good maybe they will do a dividend (like other sporting goods stocks) or share buyback to increase shareholder value. Most recent Analysts have given “outperform” ratings along with raising price targets. Price targets in the $50 - $60 range, current stock price has just recently broke $50.
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How I’m planning on playing this:
First, let me say, buying in right now at $50 is NOT advised! Continue reading to find out why.
With a confirmed earnings date of Dec 10th (Friday), that gives about two weeks of potential pullback & run-up, with a huge question mark on day of, and a potential 4-5 days of continued uptrend afterwards if earnings are once again crushed. Possibly a month or so after earnings maybe even a put play on the usual downtrend. (Thanks to @tedro for pointing that out!)
Warning: Dick’s Sporting Goods (DKS) has their earnings on Nov 23rd. This could potentially affect Academy’s price as sometimes sporting goods stocks will move in sympathy of each other.
Traditionally the week of Thanksgiving has been very good to the markets, and in turn I hope that reflects for this stock. HOWEVER, looking at the chart it appears to have just broken above the channel, so there are those red warning lights going off in the back of my head that it could (and should) head for a reversal, likely in the $47-$45 range. Or it could potentially just ride along the top of the channel staying in the $50-$53 range.
After receiving some feedback and staring at the chart longer I’m changing my plan from previously. I think the week of Thanksgiving is just going to be a “wait & see” scenario. Ideally we would like it to pull back to $45-$47 for a good entry. With Thanksgiving / Holiday shopping sentiment boost and Dick’s earnings on Tuesday it’s going to definitely be a wild ride.
The following week (week after Thanksgiving / week before earnings) if it has pullback then would be a good time to look to start building a position. If Dick’s has good earnings and doesn’t mention too many negatives then it gives a little more chance that Academy will follow suite. Again, looking for a good entry price which could happen any day of the week. Even if one never presents itself, there is always hope for a post-earnings play.
If they crush earnings, then we can hope / expect a continued uptrend for hopefully another 4 days, give or take. If they miss earnings it will likely immediately drop back into the mid-to-low $40’s (maybe even dip briefly into the high 30’s if things are really bad) and probably go flat for a while.
@tedro noted the pullback after earnings, and while I think a lot of that was triggered by KKR, now that they no longer have any stake in the company I think the expected pullback could be more muted / slower, but still a strong possibility of it happening.
UPDATE Nov-23 EoD: As I was hoping the price almost touched $45 ($45.03), and I decided to chance it and bought a single call and a few shares near that dip price. Price rebounded all the way back to $48.37 at close! That was a lot more than I was expecting, I almost sold my call since it was up so much. The good news is that ASO seems to be moving pretty much independent of SPY right now, though I’m sure it can still succumb to major market conditions. With as much movement today and still 2-weeks (estimated) till earnings, I’m pretty sure the stock will still ping-pong around $45ish to $50ish for a little longer until perhaps the middle of next week it might start to hold higher prices and maybe even potentially run in the mid-50’s. If it touches $50 again this week, I’m going to sell my option and those few shares and wait for it to dip back down again, might as well lock in some profit! As a note, DKS had their earnings today and even though they crushed it and had good guidance, the stock went down. I don’t usually follow DKS so I don’t know if the stock was simply overpriced or what but I’m going to keep an eye on it this week and also try to read more on their earnings to see what happened.
UPDATE Dec-4: A couple interesting things happened this week somewhat related to Academy. First, Hibbett’s had their earnings PM on 12/3, overall positive, and gave their stock a nice boost, however they suffered the same meltdown as the rest of the market during regular hours. Second, on 12/2 after-hours, Sportsman’s Warehouse tanked on news that the FTC was blocking its merger with Bass Pro shops.
With the COVID omicron news hitting the market on 11/26, inflation, tapering, and everything else the stock managed to hold up pretty well, up until this past Friday (12/3) when the whole market just melted down and even dragged down ASO ~4%. As a reminder, earnings will be this coming Friday (12/10) before market open.
BTC decided to have a meltdown Saturday morning and crashed ~17%. I fear the markets likely will move even more red on Monday. I’m currently holding some 12/17 calls for ASO, but might sell them first thing Monday if I feel the stock will continue to trend down… possible support at $39 otherwise we could fall to $35 if the market decides to just really tank. This could also be a good opportunity to scalp puts (scalp, not hold).
I’m really hoping the stock will hold above $40, especially this close to earnings. But we could just be at the greater mercy of the market right now as fears are increasing and people are pulling out. This week we could hear more news from pharma about existing vaccine effectiveness against omicron as it will be ~2 weeks come Friday. Literally anything could happen.
Buying a call with an expiry in January would be safest to hedge against market current conditions. Even safer would be to buy shares (assuming you are okay with a possible month or two hold). I have absolutely no idea what Monday will bring, if things turn south then you might want to wait and see if the price goes into the 30’s. That would be a bargain price as it will eventually return to $48-$50 once the market calms down.
Disclosure: I’ve owned a small amount of shares of ASO at $34 that won’t be touched. I like the stock.
ASO - Company Research Highlights Report - 12-4.pdf (47.0 KB)
ASO - Compustat Company Report - 12-4.pdf (200.8 KB)