Can Academy Sports Rally Continue After Recent 9.2% Price Surge in 2025?

• Ever wondered if Academy Sports and Outdoors stock is trading at a bargain or carrying a hidden premium? You are not alone; investors everywhere are asking whether now is the right time to buy or watch from the sidelines.
• The stock has caught some attention lately, climbing 9.2% this past week, even as it is still down nearly 15% year-to-date and just about flat over the last year.
• One reason for the recent moves is sector-wide optimism following positive consumer spending data, which has lifted the mood for retail stocks across the board. On top of that, new store openings have generated buzz, with analysts and local business press pointing to Academy’s continued expansion into fresh markets as a growth signal.
• But what really matters is valuation: Academy’s value score stands at 5 out of 6, meaning it is undervalued on most key checks. We will break down what this means using different valuation approaches. At the end of the article, I will show you an even smarter way to gauge value that savvy investors often overlook.

Academy Sports and Outdoors delivered -1.0% returns over the last year. See how this stacks up to the rest of the Specialty Retail industry.

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

The Discounted Cash Flow (DCF) model estimates the fair value of Academy Sports and Outdoors by projecting the company’s future cash flows and discounting them back to today’s value. This approach gives investors a sense of the company’s intrinsic worth based on its ability to generate cash in the future.

For Academy Sports and Outdoors, the most recent twelve months’ free cash flow stood at $284.3 million. Analysts expect this figure to increase gradually, with projections for 2028 reaching $319 million. Over the next ten years, Simply Wall St extrapolates these forecasts further and shows a consistent upward trend in cash flow.

Based on these discounted future cash flows, the DCF model arrives at an estimated intrinsic value of $68.92 per share. With the current share price trading at a 30.0% discount to this valuation, the model suggests that Academy Sports and Outdoors is undervalued by a significant margin.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Academy Sports and Outdoors is undervalued by 30.0%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Academy Sports and Outdoors.

Approach 2: Academy Sports and Outdoors Price vs Earnings

For companies generating consistent profits, the Price-to-Earnings (PE) ratio is a widely used and effective way to judge valuation. It tells investors how much they are willing to pay today for each dollar of current earnings, a measure especially meaningful for profitable retailers like Academy Sports and Outdoors.

Market participants generally expect a higher PE for companies with stronger growth prospects or less risk, while slower growth or higher risk tends to warrant a lower PE. This is why understanding what constitutes a "normal" or "fair" PE depends on more than just the company's recent performance; it should also reflect its broader outlook and risk profile.

Academy Sports and Outdoors is currently trading at a PE ratio of 8.7x. That is notably lower than the Specialty Retail industry average of 18.0x and the peer average of 20.3x, suggesting the market is pricing Academy at a bargain relative to its sector. However, just comparing to industry averages does not account for the company’s individual characteristics.

This is where the proprietary "Fair Ratio" from Simply Wall St gives added perspective. The Fair Ratio considers specific factors such as Academy’s expected earnings growth, profit margins, risk level, market capitalization, and competitive landscape. In this case, the Fair Ratio for Academy is 15.8x, meaning that, based on all those factors, Academy should trade closer to this multiple if the market valued it fairly.

Comparing Academy’s current PE of 8.7x to its Fair Ratio of 15.8x highlights a meaningful undervaluation. While industry comparisons suggest the stock is cheap, the Fair Ratio analysis goes further, confirming that Academy Sports and Outdoors is undervalued even after accounting for its unique risk and growth profile.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

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

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. Narratives are a simple yet powerful tool that lets you connect your own story and perspective on Academy Sports and Outdoors with tailored forecasts for revenue, earnings, and margins. Essentially, you build your expectations into a financial model that helps estimate fair value.

By linking the company's business story directly to future financial outcomes, Narratives make it easier to see how shifts in market trends, business strategies, or risks might change the investment thesis. Available to everyone on Simply Wall St’s Community page, Narratives are used by millions of investors to help decide whether to buy or sell by comparing their own Fair Value to the current share price. This offers a much more personal and dynamic approach than relying solely on static analyst targets.

These Narratives are updated automatically as new information such as news, earnings, or guidance arrives, keeping your perspective current without any manual effort. For example, with Academy Sports and Outdoors, one investor may see opportunity in robust e-commerce expansion and set a bullish target near $70, while another may focus on promotional risks and target $47. This shows how Narratives accommodate a range of views and fair value estimates in real time.

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.

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