The S&P/ASX 300 Index (ASX: XKO) stock Accent Group Ltd (ASX: AX1) could be a strong performer if analysts' optimism is well-founded.
According to Commsec, there are currently seven buy ratings on the business and there are five hold ratings.
One of the brokers that has a buy rating on the ASX 300 stock is UBS.
UBS describes Accent as a business that operates in the performance and lifestyle market segment in Australia and New Zealand, predominantly footwear, with a growing apparel business.
The ASX 300 stock operates multiple retail brands including owned brands such as The Athlete's Foot (which is also franchised), Platypus and Hype. Accent also has wholesale distributed brands such as Skechers, Vans, Reebok and Dr Martens. UBS points out that Accent has a growing focus on sales with brands that it owns to complement the "strong third-party brand offering."
What do analysts like about Accent shares?
UBS notes that the business delivered "robust" sales growth in the first half of FY25, with multiple drivers. In HY25, retail like-for-like sales growth was 2.9% and wholesale growth was 1.3%. In the first seven weeks of the second half of FY25, it delivered retail like-for-like sales growth of 2.2%.
The broker believes that store network expansion remains a "key driver" for the business. While store openings have slowed in FY25, this is expected to recover in FY26, with store refurbishments to accelerate as well.
UBS also believes that Accent has "very strong" cost of doing business (CODB) control, which was shown in the FY25 first half, with the second half of FY25 to get a full half of those cost control benefits.
The ASX 300 stock has a cheap valuation
The broker points out that Accent is trading on a cheaper price/earnings (P/E) ratio valuation than other small cap shares, such as Universal Store Holdings Ltd (ASX: UNI).
According to UBS, Accent shares are trading at less than 12x FY26's estimated earnings, with a possible grossed-up dividend yield of 8%, including franking credits. Impressively, the broker thinks Accent could grow its net profit by 33% between FY26 to FY29.
The broker has a price target of $2.45 on the business, implying a possible rise of 37.6% in the next 12 months.
