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A Sporting Goods Retailer Worth a Closer Look
In the world of sporting goods retail, one company stands out for its impressive growth story and attractive valuation. Academy Sports and Outdoors, a retailer that combines elements of Dick’s Sporting Goods, Walmart, and TJ Maxx, has been quietly building a strong business. Despite a recent dip in sales, the company’s long-term prospects remain bright.
A Cash Flow Story
Academy Sports and Outdoors generates significant cash flow, with free cash flow of $150-$200 million expected in the next quarter. This cash flow is being used to aggressively retire shares, with the company spending $700 million on share repurchases. This is a prudent use of capital, as the stock is trading at a discount to its intrinsic value.
A Long-Term Secular Growth Story
The company’s management team, in place since 2019, has a proven track record of delivering growth. Academy Sports and Outdoors is expanding its store count, with plans to open 15-20 new locations next year. This growth will drive sales and earnings higher, making the stock an attractive investment opportunity.
Competent Capital Allocation
The company’s capital allocation decisions are also noteworthy. Academy Sports and Outdoors is self-funding its growth initiatives, rather than relying on debt. This approach has allowed the company to maintain a strong balance sheet and invest in its business for the long term.
Aritzia: A Canadian Retail Success Story
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