Sportsman’s Warehouse Trading Volume Spike Signals Opportunity

Key Points

• Sportsman's Warehouse's trading volume spiked exponentially on news that its turnaround efforts are working.
• Guidance is favorable and may be cautious. 
• Analysts are lifting their price targets and see another solid double-digit advance by year's end. 

Sportsman’s Warehouse NASDAQ: SPWH is throwing off a powerful signal if trading volume can be used as an indicator.

The volume for this stock surged to over 105 million on the day after its FQ4 2024 earnings release and guidance update, a significant figure because it is a 21,000% increase over the average, 3x the float, and short-covering is an unlikely factor.

Despite its protracted downtrend, short interest in the stock remains surprisingly low at just 1.8% in March.

Sportsman’s Warehouse Takes Aim at Operational Quality

Sportsman’s Warehouse struggled with headwinds in 2024 and Q4, but its efforts to refocus on core shooting sports, hunting, and fishing are paying off. The company logged a better-than-expected 8.1% contraction in Q4, producing $340.4 million in net revenue and improved profitability.

The decline is primarily due to the tough comp to last year’s 14-week period; this year’s adjusted comps are more favorable and down only 0.5% compared to the 12% decline posted in the previous period. 

More importantly, margin and cash flow improved through operational improvement and inventory drawdown. The company’s SG&A expense increased slightly as a percentage of revenue but declined in dollar value, compounded by a 360-basis-point improvement in gross margin.

The net result is a surprise adjusted profit with EPS of $0.04, up $0.24 annually and a dime ahead of MarketBeat’s reported consensus. The critical takeaway is that margin strength is expected to continue in the current quarter and F2026. 

Guidance is also good. The company forecasts revenue to be down slightly to up a modest single-digit amount, aligning with the consensus forecast but potentially cautious given the clear improvement in operational quality. More importantly, the company forecasts EBITDA growth above 10% in the low-end range, which is sufficient to sustain the balance sheet's health. 

Analysts Respond Favorably: Sportsman’s Warehouse to Gain 50% or More

The analysts’ response to Sportsman’s Warehouse’s news is mixed, including a single price target reduction offset by an upgrade and two price target increases. The upgrade is to Buy from Hold from Craig Hallum; the price target increases are to an above-consensus $3.00, which indicates a 65% upside for the stock.

Remove Ads

Even the lowered target is bullish for this market, aligning with trends that include increasing coverage, firming sentiment, and an uptrend in the consensus price target. The low target indicates a move to $2.50 or a 28% upside from the $1.65 level. 

Institutional trends also align with a bottom for this market. The institutions began buying on balance in Q3 2024 and ramped activity in Q4 and Q1 2025, hitting a multiyear high as the stock price fell to multiyear lows.

The Q1 activity is worth about $10 million or roughly 10% of the market cap, with shares at $1.65, and they increased their cumulative holdings to about 85% of the stock. That is a solid support base and bullish tailwind for this retail stock. 

Sportsman’s Warehouse Hits Bottom: Reversal In Play

Sportsman’s Warehouse gave up a solid mid-teens amount the day after its surge, but that is to be expected given the size of the movement. The critical detail is that the market appears to be supported above the mid-point of the prior day's movement and is creating a bullish Harami Pattern.

The Harami is a sign of indecision and change that, in this case, will lead to a price reversal. The question is whether the market enters consolidation and moves sideways before it advances to the consensus target or continues to move higher in Q2 2025. The critical resistance point is at $2.00; if the market moves above it, a move to $3.00 will soon follow.