Since November 2024, Academy Sports has been in a holding pattern, posting a small return of 0.8% while floating around $45.60.

Is now the time to buy Academy Sports, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Is Academy Sports Not Exciting?

We're sitting this one out for now. Here are three reasons why you should be careful with ASO and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Academy Sports’s 4.2% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer retail sector.Academy Sports Quarterly Revenue

2. Shrinking Same-Store Sales Indicate Waning Demand

Same-store sales show the change in sales for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year. This is a key performance indicator because it measures organic growth.

Academy Sports’s demand has been shrinking over the last two years as its same-store sales have averaged 5.9% annual declines.Academy Sports Same-Store Sales Growth

3. Shrinking Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Looking at the trend in its profitability, Academy Sports’s operating margin decreased by 1.9 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 9.1%.Academy Sports Trailing 12-Month Operating Margin (GAAP)

Final Judgment

Academy Sports isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 6.9× forward P/E (or $45.60 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at our favorite semiconductor picks and shovels play.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

Story Continues

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

View Comments