Insiders Are Selling Academy Sports And Outdoors, Institutions Are Buying
Insiders and large shareholders have been dumping shares of Academy Sports And Outdoors (NASDAQ: ASO) and that is no joke. Insiders and large shareholders sold nearly 62.5 million shares over the past 12 months which is equal to 70% of the shares outstanding. The sales are negative for price action, that’s a lot of stock to dump on the market, but there are some mitigating factors that may make the matter moot. While selling had been accelerating on a quarter to quarter basis, it appears to have stopped altogether. There have been no sales since the middle of November and there are other factors to be aware of as well.
While a broad array of executives, board members, and large shareholders were dumping their shares the institutions have been scooping them up. Insiders reduced their holdings to just under 2.0% of the company following the expiration of lock-up periods but the institutions have offset that by increasing theirs to 96%. That’s a huge vote of confidence in a company we see as well-positioned within a strong industry with secular-grade tailwinds.
The Analysts Like Academy Sports And Outdoors, Inc
Wells Fargo called the stock just ahead of the Q3 earnings report stating it should be bought on any post-earnings dip that may arise. The post-earnings price action has been largely positive, as has the analyst’s chatter, and not provided a significant dip in prices. Bank of America, for one, maintained a Buy rating on the stock while upping the price target to $68 or about 45% upside from recent price action. In their view, Academy Sports And Outdoors is in a good position relative to inventory levels and demand and should be able to outperform in terms of margin and earnings. BOA also sees an opportunity for accelerated store growth and we agree. Bank of America’s $68 target is the new sell-side high and almost $15 above the consensus.
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Academy Sports And Outdoors Scores In Q3
Academy Sports And Outdoors had a phenomenal quarter on top of strong gains last year to produce strong two-year growth and beat the analyst’s consensus by a wide margin. The $1.59 billion in net revenue is up 17.8% on a 17.9% comp-store gain to beat the consensus by 670 basis points. Last year, comps were up 16.5% so the strength is not only unexpected but an accelerating that points to solid gains in the current quarter as well. Moving down, the company experienced some margin pressure but not as much as feared due to the company’s inventory position. The GAAP earnings of $1.72 beat by $0.70 while the adjusted $1.75 beat by $0.64.
Looking forward, the company is not only expecting the full year to be strong but for the 4th quarter to exceed the current expectations as well. The new guidance for revenue is a range well above both the previous guidance and the analyst’s consensus with adjusted EPS in the range of $7.21 to $7.31. That compares to the consensus of $6.43 and we see upside risk in the numbers due to consumer strength and momentum within the industry.
The Technical Outlook: Academy Sports And Outdoors Is Testing Support
Shares of Academy Sports And Outdoors have been trending upward since the IPO and are still in an uptrend. The post-release action has price action confirming the trend by moving above the short-term EMA and that support is now being tested. Assuming the 30-day EMA is able to hold as support, we see this stock moving up to retest the recent highs near $51 and then moving higher. In our view, the entire sporting goods industry is well-supported by demand, producing strong earnings, giving favorable guidance, and is incredibly undervalued with relatively high short-interest. A recipe for higher share prices if ever we saw one.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Academy Sports and Outdoors (ASO) | $46.39 | +1.3% | 0.95% | 7.16 | Hold | $61.57 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
