• Wondering whether Academy Sports and Outdoors at around US$54.46 is still priced attractively, or if most of the easy upside is gone? This article focuses squarely on what the numbers say about value.
• The stock has returned 4.4% year to date and 36.7% over the past year, while the past 30 days and 7 days show declines of 4.8% and 0.7%. This can change how the market is thinking about risk and opportunity.
• Recent coverage around Academy Sports and Outdoors has centered on how the business is positioned within specialty retail and how investors are reacting to the stock's multi year return of 62.0% over five years versus a 7.1% decline over three years. These mixed time frames help explain why short term moves can look choppy even when longer term performance figures are stronger.
• Right now the company scores 5 out of 6 on Simply Wall St's valuation checks, giving it a valuation score of 5. The sections that follow will walk through the main valuation methods before finishing with a broader way to think about what that score really means for you.

Approach 1: Academy Sports and Outdoors Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash the company is expected to generate in the future and discounts those amounts back to today, giving a single estimate of what the stock could be worth based on those projected cash flows.

For Academy Sports and Outdoors, the latest twelve month Free Cash Flow is about $227.6 million. Analysts and extrapolated estimates point to Free Cash Flow reaching about $426.1 million in 2035, using a 2 Stage Free Cash Flow to Equity approach. Simply Wall St uses analyst inputs out to 2029 and then extends that path further, all in dollar terms, to build a ten year cash flow profile that is discounted back to today.

On this basis, the model arrives at an estimated intrinsic value of $79.33 per share. Compared with the recent share price of about $54.46, the DCF outcome implies the stock is 31.3% undervalued according to these assumptions and projections.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Academy Sports and Outdoors is undervalued by 31.3%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: Academy Sports and Outdoors Price vs Earnings

For profitable companies, the P/E ratio is a useful way to relate the price you pay for a stock to the earnings the business is generating today. It helps you see how many dollars of share price the market is assigning to each dollar of current earnings.

What counts as a “normal” P/E depends on how the market views growth and risk. Higher expected growth or lower perceived risk can justify a higher P/E, while slower expected growth or higher risk usually line up with a lower P/E.

Academy Sports and Outdoors currently trades on a P/E of 9.32x. This sits well below the Specialty Retail industry average P/E of 19.70x and the broader peer group average of 21.55x. Simply Wall St’s Fair Ratio framework estimates what a more tailored P/E might look like, based on factors such as the company’s earnings growth profile, industry, profit margins, market cap and specific risks.

This Fair Ratio for Academy Sports and Outdoors is 15.53x, which is more company specific than a simple industry or peer comparison because it adjusts for those business characteristics. With the stock trading at 9.32x versus a Fair Ratio of 15.53x, the P/E based view suggests the shares currently look inexpensive relative to that Fair Ratio.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Academy Sports and Outdoors Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as a simple way for you to attach a clear story about Academy Sports and Outdoors to the numbers, by linking your view of its future revenue, earnings and margins to a forecast and then to a fair value that you can compare with the current share price.

On Simply Wall St, Narratives are available on the Community page and are used by millions of investors as an accessible tool to lay out assumptions, track how fair value compares to market price and see whether that gap suggests a buy, sell or hold decision for their own portfolio.

Because Narratives update automatically when new information such as earnings, guidance or news is released, your fair value view can adjust in real time rather than sitting static while the story changes around you.

For Academy Sports and Outdoors, one investor might align with the higher analyst fair value around US$70.00 based on expectations for store openings, e commerce growth and margin improvement. Another might lean toward the lower US$49.00 view that focuses on slower assumed revenue growth, tighter P/E and risks around digital execution and regional concentration. Both Narratives can sit side by side on the platform so you can decide which story fits your own expectations.

For Academy Sports and Outdoors, here are previews of two leading Academy Sports and Outdoors Narratives to make comparison easier:

Each Narrative ties the same stock to a different fair value, growth path and risk profile, so you can see how changing a few core assumptions shifts the outcome.

Fair value: US$60.28

Implied pricing gap vs last close: about 9.6% below that fair value, based on the analyst consensus target of US$60.28 and a last close of US$54.46.

Revenue growth assumption: 5.07% a year

• Analysts frame a balanced outlook that leans on steady store openings in secondary and tertiary markets, plus e commerce growth to support revenue and earnings.
• They include moderate revenue growth to about US$7.0b and earnings of US$486.6m by 2029, with profit margins rising from 6.2% to 6.9% and a P/E of 9.6x on those earnings.
• Key risks include dependence on higher income customers, cost and promotional pressures, reliance on major brands and regional exposure, which could all pressure margins and growth if conditions become less favorable.

Fair value: US$49.00

Implied pricing gap vs last close: about 11.1% above that fair value, based on a bearish target of US$49.00 and a last close of US$54.46.

Revenue growth assumption: 3.77% a year

• Bearish analysts focus on slower assumed revenue growth to about US$6.8b and earnings of US$451.1m by 2029, paired with a lower P/E of 8.3x on those earnings.
• They place more weight on risks around e commerce competition, demographic changes, brand and supply chain dependencies, regional concentration and ESG related cost pressure.
• In this view, even with some improvement in the underlying business, the current share price of US$54.46 sits above the US$49.00 fair value used in the model, which limits the room they see for upside.

If you want to see these fair value paths, earnings assumptions and risk checks laid out end to end, you can step through the full Narratives for Academy Sports and Outdoors and compare them with your own expectations for the stock.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Academy Sports and Outdoors on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Academy Sports and Outdoors? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.