What Happened?
Shares of sporting goods retailer Academy Sports & Outdoor (NASDAQ: ASO) fell 3.4% in the afternoon session after the stock extended its negative momentum as the company reported second-quarter results that missed Wall Street's expectations for both revenue and earnings.
The negative market reaction came despite management's comments on improving sales momentum compared to prior quarters. The company also cited particular strength in its e-commerce division and noted that same-store sales were stabilizing. However, investors focused on the top- and bottom-line miss, sending shares lower during Tuesday's trading.
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What Is The Market Telling Us
Academy Sports’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 8.5% on the news that the company reported second-quarter results that missed analyst expectations for both profit and sales. The company posted quarterly adjusted earnings of $1.94 per share, falling short of the consensus estimate of $2.13. Revenue for the quarter came in at $1.6 billion, slightly below the expected $1.61 billion. While total sales grew 3.3% year-over-year and same-store sales were flat, a notable improvement from recent declines, these points were overshadowed by weakening profitability. The company's operating margin contracted to 10.8% from 12.3% in the same period last year. Despite the misses, management raised its full-year guidance for both revenue and earnings, but this failed to reassure investors, who reacted to the weaker-than-expected quarterly performance.
Academy Sports is down 13.4% since the beginning of the year, and at $48.96 per share, it is trading 22% below its 52-week high of $62.75 from September 2024. Investors who bought $1,000 worth of Academy Sports’s shares at the IPO in October 2020 would now be looking at an investment worth $3,769.
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