Academy Sports and Outdoors beats earnings but analysts remain cautious on tariff benefits

Academy Sports and Outdoors reported a second-quarter earnings beat for the period ended 1 August 2026, with net sales rising 3.0 per cent to $1.65 billion. Adjusted earnings per share increased 19.1 per cent to $2.31, up from $1.94 in the prior year period. Gross margin widened by 440 basis points to 40.4 per cent, a result management attributed in part to a tariff refund.

Despite the positive financial results, comparable sales fell by 0.4 per cent, signalling underlying softness in consumer demand. Management responded by lifting full-year adjusted earnings per share guidance to between $6.50 and $6.90 and gross margin guidance to between 35.5 per cent and 36.0 per cent. The company also raised its adjusted free cash flow guidance to $300 million to $350 million, following the repurchase of $182.1 million in stock during the first half of the year.

Analysts responded to the results with a mix of optimism and caution. Telsey Advisory raised its price target to $63 from $60 while maintaining an Outperform rating, describing the risk-reward as attractive. Wells Fargo increased its target to $55 from $50, keeping an Equal Weight rating, with analysts noting that both the quarter and forward commentary delivered upside surprises. Barclays also lifted its target to $53 from $50 at Equal Weight, highlighting that the company held its fiscal 2026 sales and comparable sales guidance despite a tougher consumer backdrop.

UBS raised its target to $58 from $55 but maintained a Neutral rating, questioning whether the company can sustain growth through actual sales and demand rather than cost control and buybacks. The firm noted that the 510 basis points of tariff refund benefit within the gross margin will not repeat. BMO Capital initiated coverage at Market Perform with a $42 target, arguing that the path to positive comparable sales becomes harder as the athletic category slows.

Supporting the broader case for the stock, e-commerce sales grew by 12.8 per cent and the Sports and Recreation category rose by 6 per cent. The myAcademy loyalty programme membership surpassed 15 million. However, underlying data showed traffic from households earning under $50,000 fell by high single digits, and footwear sales declined by 1 per cent. Inventory rose 4.4 per cent year-over-year, adding to concerns about demand.

As of 15 September 2026, shares traded at 8.16 times forward earnings, with short interest at 23.30 per cent of float. Royce & Associates held the largest hedge fund position with 1.08 million shares, while overall hedge fund ownership decreased from 31 to 29 funds between the first and second quarters of 2026. The market appears to be treating the raised guidance as something the company still needs to prove in the back half of the year.