00:00Seth, I'm going to put you on the spot here, and I'm going to give you a couple stocks
00:04that are in similar spaces, kind of competitors, and you tell me which one you would rather
00:10own.
00:11Okay?
00:12Okay.
00:13All right.
00:14We'll start with Academy Sports, ticker ASO, versus Dick's Sporting Goods.
00:21Our ratings are based on a 12-month timeframe, and on that basis, we prefer Academy Sports
00:27over Dick's.
00:28Okay.
00:29Why is that?
00:30Why is that?
00:31So Academy's valuation is extremely attractive.
00:34It's a growth story that's not being valued appropriately.
00:38They potentially add 50% to their store base, and once they get comparable store sales back
00:45to positive, and the unit economics of those new stores show some improvement, they're
00:51going to get valued appropriately.
00:53In the near term, they're in the doghouse, because they serve more of a low-income customer
00:58than does Dick's.
00:59They don't have access to as many marquee brands, and so there's a very big divergence
01:04between the two companies when it comes to comparable store sales.
01:06But as we move into 2025, we expect some of those pressures to dissipate, and the valuation
01:12gap to narrow.
01:13What?
01:14I mean, I've only been to a couple Academy Sports.
01:17I've been to some Dick's Sporting Goods.
01:18It seems like Academy is more geared toward outdoors, kind of like the hunting, or outdoor
01:26adventure.
01:27Do you see any big differentiators between the two companies, or are they just both to
01:31you like big sports retail stores?
01:36Academy does have more exposure to the outdoors category and to hard lines generally, relative
01:43to Dick's, which has more exposure to footwear and apparel.
01:47The drivers of the industry over the last year and a half have been certainly in footwear
01:51and apparel, so that's been something that's weighed on Academy.
01:56The other big thing that I mentioned before is their customer-based exposure, and there's
02:00some regional exposure as well, with Academy Sports mostly in Texas and the Southeast.
02:05So those are three differentiators that's leading to underperformance for them, and
02:09we expect those to start to improve in 2025.
02:13And the last one, as I mentioned before, is they don't have key hot brands like Hoka
02:18and On Running Shoes, for example, and we hope that they'll get those in 2025 as well.
02:25For more information, visit www.academy.edu
Comments