American Outdoor Brands, Inc. AOUT stock is currently trading at a notable discount relative to the Zacks Leisure and Recreation Products industry. With a forward 12-month Price/Earnings ratio of 14.99x, it sits well below the industry average of 28.75x and the Consumer Discretionary sector’s 17.96x.

In the past three months, AOUT shares have gained 8% compared with the industry’s growth of 19.1%. In the same time frame, other stocks like On Holding AG ONON, Acushnet Holdings Corp. GOLF and Academy Sports and Outdoors, Inc. ASO have gained 33.6%, 0.8% and 5.7%, respectively.

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Although the company’s shares have underperformed the industry, positive earnings estimate revision indicates that the stock can bounce back. In the past 30 days, analysts have raised their estimates for the current and the next fiscal year by 4.1% to 51 cents and 10.8% to 72 cents per share, respectively.

Factors Favoring AOUT

American Outdoor Brands attributes its growth strategy to the company’s strong focus on product innovation and expanding distribution. By continually refining its understanding of the 175 million Americans engaged in outdoor activities like hunting, fishing and grilling, AOUT develops innovative, consumer-focused solutions that enhance outdoor experiences. This innovation process is a core strength, allowing the company to introduce both new products and entire brands that address needs of its customers .

The company’s focus on innovation continues to drive growth. AOUT introduced several new products that performed well across its outdoor lifestyle and shooting sports categories, accounting for approximately 23% of net sales in first-quarter fiscal 2025. Notably, new releases like the Caldwell Claymore family and Bubba Pro Series Smart Fish Scale resonated strongly with its consumers.

AOUT expanded its retail footprint, bringing popular brands like BOG and Caldwell to new locations. International sales, particularly in Canada, also grew significantly with net sales increasing more than 21% in first-quarter fiscal 2025, demonstrating strong international demand.

Looking ahead, AOUT anticipates full-year net sales to grow 2.5%, driven by new product launches and distribution opportunities particularly in the outdoor lifestyle category. However, the company expects some headwinds in the shooting sports segment, with second-quarter fiscal 2025 sales projected to decline before returning to growth in the second half of the year. Gross margins are expected to remain steady at around 45%.

Conclusion

American Outdoor Brands presents an attractive investment opportunity, as the stock is currently undervalued and analysts have recently upgraded their earnings forecasts for the company. The introduction of successful new products, particularly in outdoor lifestyle and shooting sports, has contributed to sales and international markets, especially Canada, have shown promising growth. The company currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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