Are Accent Group (ASX:AX1) Shares Undervalued After Underlying EBIT Strength?

Accent Group shares closed at A$0.725 on Friday after the market digested a set of results that mixed an underlying profit story with a headline loss. The stock has climbed over the past week and quarter, yet the fresh numbers forced investors to weigh that bounce against a year that finished in the red.

The real story is not the one year loss of A$13.8m after a goodwill impairment. It is the A$105.3m in underlying earnings before interest and tax and the gap between the A$0.73 share price and an estimated A$4.83 per share valuation that long term holders will focus on next.

Love the A$105.3m in underlying earnings but concerned about a year that still finished in the red? Take a look at our 10 resilient stocks with low risk scores for companies that pair earnings power with more resilient risk profiles.

FY 2026 Earnings Summary

• Revenue FY 2026: A$1,540.8m vs. FY 2025 A$1,476.3m (reported change based on trailing twelve month figures)
• Net Income/Loss FY 2026: loss of A$13.8m vs. FY 2025 profit of A$57.7m (reported shift from profit to loss on a trailing twelve month basis)
• Basic EPS FY 2026: loss of A$0.0229 per share vs. FY 2025 EPS of A$0.1012 (reported swing from earnings to loss on a trailing twelve month basis)
• Underlying EBIT FY 2026: A$105.3m vs. prior year EBIT A$34.0m (reported improvement in underlying earnings after adjusting for significant items)

Prefer clean charts instead of another wall of Accent Group figures and footnotes? Get a full visual breakdown of Accent Group with a focus on its valuation in the company report for Accent Group.

Accent bull case hinges on EBIT quality and reset

Bulls argue Accent Group is quietly rebuilding earnings power, with store rationalisation and performance sports growth setting up a cleaner profit base. The A$105.3m in underlying EBIT, against a reported loss driven by a non cash A$48.6m goodwill impairment, supports the claim that the core retail engine is still profitable. Owned retail sales of A$1.4b and wholesale at A$172m, plus A$137m from vertical brands, show breadth across channels rather than reliance on a single banner. Portfolio pruning was not just theory. Accent closed 59 stores where rents or formats no longer worked and still finished with 876 stores. Early FY27 trading, with owned sales up 3.2% once exited businesses are removed and improving gross margin, indicates that the reset is starting to feed through operations rather than sitting only in a long term 2030 slide.

Bear case focuses on governance, like for like strain

The bear story claims Accent Group faces structurally weaker retail economics, governance concerns and an overambitious rollout plan. Several markers give that view some traction. The year finished with a statutory loss of A$13.8m and like for like sales declined 0.5% for FY26, with a softer H2 at down 2%. Early FY27 like for like is down 2% despite portfolio exits, which points to underlying demand pressure in the existing store base. The ASIC investigation and Frasers Group criticism of governance keep board risk in focus, especially with an unconditional A$0.65 bid already on market and Frasers near a quarter of the register. Inventory has risen to A$334.8m, which management says is clean, yet it still ties up capital while net debt sits at A$91.4m. Execution on Sports Direct, reacquisitions and cost out now has less room for error.

After ASIC scrutiny, rising inventory and a recent goodwill impairment, you may ask if these are isolated issues or early warning signals. Review the full risk analysis for Accent Group which shows 1 important warning sign

Stay Ahead With Accent Group Insights

If the contrast between Accent Group’s underlying A$105.3m EBIT and its statutory loss has your attention, register for free with Simply Wall St and add the stock to your Watchlist to track price against fair value and watch how the thesis develops. After you decide to take a position, use the Portfolio Command Center to cut through market noise and keep on top of earnings, valuations and key announcements that matter for your holdings. For a longer term view, tap into crowd wisdom and see how other investors are thinking about Accent Group and similar stocks through the Community. By surfacing potential catalysts and risks early, Simply Wall St helps you act with confidence and stay a step ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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