Down More Than 25% YTD, these 2 Retail Stocks Look Cheap

: ASO | Academy Sports & Outdoors Inc. News, Ratings, and Charts

ASO – Retail sales for January were the highest they’ve been in 10 months. Furthermore, with COVID-19 cases and supply chain issues subsiding, retail sales are expected to remain buoyant. Hence, we think retail stocks Academy Sports and Outdoors (ASO) and Shoe Carnival (SCVL), which have retreated more than 25% in price this year and look undervalued at their current prices, could now be worth betting on. Let’s discuss.

During the worst of the COVID-19 pandemic, the retail sector saw a significant shift in consumer preference towards online shopping. The U.S. Department of Commerce Retail Indicator Division stated that e-Commerce sales in the country were $870 billion in 2021, representing a 14.2% increase over 2020.

Furthermore, U.S January retail sales increased by the greatest level in 10 months. Retail sales rose 3.8% in the month, the highest increase since March of the prior year.  In fact, sales have increased by the highest level since the government started tracking the series in 1992. Retail sales are expected to continue to trend upwards as consumers take advantage of the decline in COVID-19 cases and an easing of supply chain issues, as well as inventory restocking.

Therefore, we think the retail stocks Academy Sports and Outdoors, Inc. (ASO) and Shoe Carnival, Inc. (SCVL), which have declined more than 25% in price this year and look undervalued at their current prices, might be ideal for scooping up now.

Click here to checkout our Retail Industry Report for 2022

Academy Sports and Outdoors, Inc. (ASO)

ASO in Katy, Tex., is a sporting goods and outdoor recreational products retailer in the United States. The company offers coolers and drinkware, camping accessories, camping equipment, marine equipment, archery equipment, and fitness equipment and accessories.

On March 3, ASO announced its approval of a quarterly cash dividend of $0.075 per share of common stock, payable to shareholders on April 14, 2022. The initiation of dividend payments reflects upon the company’s ability to generate cash.

On January 25, ASO announced its plan to open at least eight new stores in 2022 in  its existing markets in Florida, Georgia, Indiana, Kentucky, and Texas and to expand its footprint in Virginia and West Virginia. The company expects to raise its existing store count to 267 and stretch its reach to 18 states through these store openings.

In terms of its forward non-GAAP P/E, ASO is currently trading at 4.46x, which is 64.6% lower than the 12.60x industry average. Its 0.28 forward non-GAAP PEG multiple  is currently trading 69% lower than the 0.90 industry average.

And for its  fiscal third quarter, ended October 30, ASO’s net sales increased 18.1% year-over-year to $1.59 billion. Its pro forma adjusted net income and pro forma adjusted EPS rose 122.6% and 92.3%, respectively, from the prior-year quarter to $164.14 million and $1.75, respectively.

The $1.38 consensus EPS estimate for the quarter ended January 31, 2022, indicates a 26.6% year-over-year increase. And the $1.77 billion  consensus revenue estimate for the same quarter reflects an improvement of 10.5% from the same period in the prior year. Moreover, ASO has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.

The stock has gained 30.8% in price over the past year but has declined 26.9% year-to-date to close Friday’s trading session at $32.10.

ASO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

ASO has a Growth, Value, Sentiment, and Quality grade of B. In the 36-stock Athletics & Recreation industry, it is ranked #1.

Click here to see the additional POWR Ratings for ASO (Momentum and Stability).

Shoe Carnival, Inc. (SCVL)

SCVL in  Evansville, Ind., is a family footwear retailer in the U.S. The company’s offerings include a variety of dress, casual, and athletic footwear products for men, women, and children. It also offers accessories, such as socks, belts, handbags, hats, and backpacks.

On December 20, SCVL announced a new share repurchase program for up to $50 million of its outstanding common stock, which became effective from January 1, 2022. The company also declared a quarterly cash dividend of $0.07 per share, which was payable on January 24. The share repurchase program and dividend payment might bolster the company’s shareholder returns.

On December 3, SCVL announced that it had acquired all the assets of privately-held, family-owned Shoe Station, Inc., a store operator in five Southeastern states. With this acquisition, the company is expected to operate Shoe Station’s locations across the Southeast and provide a complementary retail platform to serve a broader customer base across urban and suburban demographics.

SCVL’s 5.60 forward GAAP P/E multiple  is currently trading 58% lower than the 13.33 industry average. In terms of its forward EV/EBIT, the stock is trading at 4.32x, which is 63.9% lower than the 11.98x  industry average.

SCVL’s net sales increased 29.8% year-over-year to $356.34 million in its  fiscal third quarter, ended October 30. Its net income rose 219.1% from the prior-year quarter to $46.84 million, while net income per share came in at $1.64, up 221.6% from the same period the prior year.

Analysts expect SCVL’s EPS to increase 69.2% year-over-year to $0.44 for the quarter ended January 31, 2022. The Street expects revenue for the same quarter to rise 10.4% from the prior-year period to $280.42 million. In addition, SCVL has topped consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 14.1% in price to close Friday’s trading session at $29.12. However, it has declined 25.5% year-to-date.

It is no surprise that SCVL has an overall A rating, which translates to Strong Buy in our POWR Rating system.

SCVL has an A grade for Growth and Quality and a B grade for Value and Momentum. It is ranked #2 of the 66 stocks in the Fashion & Luxury industry. The industry is rated A.

To see the additional POWR Ratings for Stability and Sentiment for SCVL, click here.

Click here to checkout our Retail Industry Report for 2022


ASO shares were trading at $30.05 per share on Monday afternoon, down $2.05 (-6.39%). Year-to-date, ASO has declined -31.55%, versus a -11.43% rise in the benchmark S&P 500 index during the same period.


About the Author: Anushka Dutta


Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...


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