Stock (Symbol) |
Under Armour (UA) |
Stock Price |
$40 |
Sector |
| Retail & Travel |
Data is as of |
| May 5, 2016 |
Expected to Report |
| Jul 21 – Jul 25 |
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 has corrected a bit from its recent run higher, but the shares still sell for 59x earnings, which is still too high for me to buy. The sportswear company sported 33% profit growth last qtr on a 30% jump in sales, including a 20% gain in apparel sales and a 64% boost in shoe sales. The stock fell from $47 after earnings including a big drop from $43 to $40 on high volume yesterday. Although this stock is expensive, its one of the premier growth stories in the world, and the stock is at the top of my radar. The company is expanding rapidly into footwear, women’s’ apparel and workout technology equipment. It has the top player in the NBA, Stephen Curry, as its shoe spokesman and will release the Curry 2.5 for $135 this month. 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. UA projects 26% sales growth this year, but I think this is low as the company just grew 32% on a constant currency basis and the dollar has been falling. International sales jumped 56% last qtr but are still just 14% of total sales. This is clearly a must-own growth stock but I’m holding out to get in at a lower P/E ratio. A P/E of 59 is hard to swallow as a recession could cream this stock (UA had profits decline in 2008 and the stock got smacked). My Fair Value is 45x earnings which is $30. I’d like to get in below $35. |
One Year Chart |
 UA just broke out of a cup-and-handle but failed to hold its gains. The company beat the $0.04 profit estimate by a penny, but next qtr’s estimate fell by a penny, and now analysts expect a 4 cent profit vs. 4 cents last year which is 0% profit growth. After that the next 3 qtrs Estimates look like 22%, 25% and 25% profit growth. As a side note, the company split its stock 2-for-1 last qtr. |
Fair Value |
 This stock has had a crazy-high P/E the past couple of years — as it had around a decade ago. From peak to trough the stock fell from more than $9 to below $2 from the 2008-2009 recession. Notice the stock sold for 57x earnings in 2007 (close to the 59x it sells for now). I’m not saying a recession is coming, but economic growth has been weak lately. My Fair Values are $30 for this year and $38 for next year, and I would like to get in around the middle. |
Bottom Line |
 Under Armour could be the best growth story around, but the stock is so expensive the company could deliver solid growth as expected for the next year and the stock could still be lower than it is today. Still, I feel this is a must-own growth stock and will try to get in on a dip. My goal is to buy for the Growth Portfolio below $35. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
