• If you are wondering whether Academy Sports and Outdoors is attractively priced right now, the stock's recent track record and current valuation metrics offer a useful starting point for your own view.
• The share price closed at US$57.18 recently, with returns of 1.3% over 7 days, a 5.1% decline over 30 days, 9.6% year to date, 69.5% over 1 year, a 11.0% decline over 3 years, and 86.9% over 5 years. This gives you a range of outcomes to weigh.
• Recent coverage of Academy Sports and Outdoors has focused on its position in the US retail sector and how investors are reacting to its share price performance relative to peers and the broader market. This context helps explain why some investors are reassessing the balance between long term potential and risk at current price levels.
• Academy Sports and Outdoors currently carries a valuation score of 4 out of 6. The rest of this article will walk through the main valuation approaches behind that score while also pointing to a broader way to think about what the stock is worth by the end.

Academy Sports and Outdoors delivered 69.5% 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

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and discounting them back to a present value.

For Academy Sports and Outdoors, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $227.6 million. Analyst estimates and subsequent extrapolations point to projected Free Cash Flow of around $361.5 million in 2035, with interim years such as 2026 and 2029 sitting at $305.3 million and $319.0 million respectively. All of these figures are in US$ and remain well below $1b, so they are assessed in millions rather than billions.

Pulling these cash flow projections together, the DCF model arrives at an estimated intrinsic value of about $70.33 per share. Compared with a recent share price of $57.18, this indicates the stock is around 18.7% undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Academy Sports and Outdoors is undervalued by 18.7%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.

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 profitable companies, the P/E ratio is a useful way to link what you pay for each share to the earnings that support it, which many investors focus on when judging how much they are willing to pay for a business.

What counts as a “normal” P/E often reflects how fast earnings are expected to grow and how risky those earnings are. Higher growth and lower perceived risk usually justify a higher P/E, while slower growth or higher risk tend to pull it down.

Academy Sports and Outdoors currently trades on a P/E of 9.77x. That sits below the Specialty Retail industry average of about 19.95x and below the broader peer group average of 29.69x, so on simple comparisons the shares are priced at a lower multiple of earnings than many competitors.

Simply Wall St’s Fair Ratio is a proprietary estimate of what P/E might be reasonable for Academy Sports and Outdoors, given factors such as its earnings growth profile, industry, profit margins, market cap and key risks. This tailored measure can be more useful than raw peer or industry comparisons because it adjusts for the company’s own fundamentals instead of assuming all retailers deserve the same multiple.

For Academy Sports and Outdoors, the Fair Ratio is 14.86x versus the current 9.77x P/E, which points to the stock trading below that Fair Ratio benchmark.

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 connect your view of Academy Sports and Outdoors with the numbers by pairing a story about its future with specific assumptions on revenue, earnings and margins. These then flow through to a Fair Value you can compare with the current share price.

On Simply Wall St’s Community page, Narratives let you pick or build the story you believe, whether that is a cautious view closer to a Fair Value of about US$49.00 or a more optimistic view closer to US$70.00. This allows you to see how different expectations on things like store growth, e commerce progress and margins translate into different valuations and potential investment decisions.

Because Narratives on the platform are refreshed when new information such as news, earnings or guidance is added, your chosen story and Fair Value for Academy Sports and Outdoors are kept current without extra work from you. At the same time, it remains clear when your view differs from other investors who may be focusing on different risks or opportunities.

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

Start with the one that feels closest to your own view, then sense check the underlying assumptions rather than just the headline fair value.

🐂 Academy Sports and Outdoors Bull Case

Fair value in this bullish narrative: about US$59.94 per share.

That is roughly 4.6% above the recent US$57.18 share price, so the stock is about 4.6% undervalued versus this fair value snapshot.

Implied revenue growth assumption: about 5.68% a year.

• E commerce growth, new store openings in secondary and tertiary markets, and private label expansion are used to support steady increases in revenue and earnings.
• Margin assumptions rely on supply chain and technology projects, vendor negotiations and loyalty programs to keep profitability around the mid single digit range.
• The narrative leans on analyst consensus, where the fair value and price target range are tied back to specific expectations for revenue, earnings, P/E and share count over the next few years.

🐻 Academy Sports and Outdoors Bear Case

Fair value in this cautious narrative: about US$49.00 per share.

That is roughly 16.3% below the recent US$57.18 share price, so the stock is about 16.3% overvalued versus this fair value snapshot.

Implied revenue growth assumption: about 3.77% a year.

• Slower digital progress, dependence on physical stores and heavy reliance on third party brands frame a scenario where revenue growth trails stronger omnichannel peers.
• Regional concentration in southern states, demographic shifts in youth sports and potential ESG related cost pressures are used to support more cautious views on long term store productivity and margins.
• The narrative anchors to a US$49.00 price target, with lower assumed P/E, modest revenue growth and only slightly higher profit margins, which together leave less room for potential upside from current prices.

If you want to see how your own expectations compare with these scenarios, use the full range of Narratives as a reference point rather than a script for action, then adjust the inputs until they match what you believe is realistic for Academy Sports and Outdoors.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.