Revisiting Academy Sports and Outdoors ($ASO): the Thesis Remains Intact (Again)

A Discounted Cash Flow (DCF) Valuation

On June 2022 I wrote my first article about Academy Sports and Outdoors (ASO) where I detailed why I do like this company so much. At that time the company was trading at ~$38. In June 2023, with the stock at ~$50, I published a second article explaining why, after the disappointing Q1 2023 results, I thought the thesis remained intact. The stock kept climbing till reach its highest point, at ~$75, in March 2024. Now the stock has pulled back to ~$47 and I think it is time to revisit this company.

Source: Finance Charts

As explained in another of my previous articles, my investment approach could be described as “buy & hold, but constantly revisiting”. I do tend to keep my positions as long as possible and to analyze companies always with a long-term view, but I also think that it is important to constantly incorporate new information to each thesis in order to act swiftly in case of any change. Stock price deterioration should never be, by itself, a reason to close a position, but it should trigger the review of the analysis, and the investigation into whether something is going on and whether your initial conclusions are still valid.

In that sense, the idea of this article is to review the points of my initial thesis. Additionally, at the end of the article, I will carry out a DCF valuation in order to get a better understanding about the current opportunity.

What Is The Current Situation Of The Company?