Stock (Symbol) |
Under Armour (UA) |
Stock Price |
$86 |
Sector |
| Retail & Travel |
Data is as of |
| March 31, 2016 |
Expected to Report |
| Apr 21 |
Company Description |
 UA is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. The Company’s moisture-wicking fabrications are engineered in a range of designs and styles for wear in nearly every climate to provide an alternative to traditional products. UA operating segments include North America, consisting of the United States and Canada; Europe, the Middle East and Africa (EMEA); Asia-Pacific; Latin America, and MapMyFitness. The Company also offers digital fitness platform licenses and subscriptions, along with digital advertising through its MapMyFitness business. Its apparel offers three gearlines, including HEATGEAR, COLDGEAR and ALLSEASONGEAR. Its footwear offerings include football, baseball, lacrosse, softball and soccer cleats, slides and performance training, running, basketball and outdoor footwear. Its accessories primarily include the sale of headwear, bags and gloves. Source: Thomson Financial |
Sharek’s Take |
 Under Armour (UA) is thought of by some as the best growth story today, but at 65x earnings the stock is very rich. In its last fiscal year (which just ended) the company spent on growth initiatives (like workout technology equipment) and in posted just 11% profit growth. This year, profit growth is expected to be 25% but could be better as UA just beat the street and the dollar has weakened lately. UA has fantastic growth opportunity. Last qtr footwear sales grew 95%, and International sales increased 70% (85% on a constant currency basis) while apparel and and accessory sales increased 22% and 23%. Overall, sales have increased from $3 billion 2 years ago to $4 billion last year and are expected to hit $5 billion this year, $6 billion next year. Last qtr my goal was to get UA below $70 and it got there for a short time. But the market was crashing with recession fears all around, thus I didn’t buy in as footwear and apparel stocks can be hit hardest during recessions. Now fears have subsided, but I’m still waiting to get the stock as I feel its just too rich. Still, this company is on track to be the next Nike thus it is at the top of my radar for stocks to buy. |
One Year Chart |
 Profit growth the next 4 qtrs is expected to be 0%, 29%, 27% and 25%. With a P/E of 65 this stock is rich. Also note the Est. LTG is 24% a year. So investors have to pay 2 1/2 times growth for this stock. But on the bright side UA might be building a cup-and-handle chart pattern with a break out point around $88. |
Fair Value |
 I want to point out this company had profits decline during the last recession. This month I read there’s a 30% chance of recession next year. Recessions not only make it hard on sneaker companies (as people don’t replace their shoes) but also on high P/E stocks. I love this stock, and want it badly, but wish to stick to my guns and get it at a reasonable price. Also, UA just started a new fiscal year so that $1.68 estimate is a long-way away. |
Bottom Line |
 Under Armour could be the best growth story around, but the stock is certainly pricing this in. Investors could be paying 65x earnings for 25% to 35% growth — a steep price to pay. I love the company — and the stock — but will continue to look to get in under $70 a share. UA is on the radar. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
