Stock (Symbol) |
Under Armour (UA) |
Stock Price |
$38 |
Sector |
| Retail & Travel |
Data is as of |
| September 12, 2016 |
Expected to Report |
| Oct 20 – 24 |
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 has perhaps the best growth opportunity of any stock I follow, as the company is has numerous product areas that are in rapid expansion. Overall, sales have increased from $3 billion two years ago to $4 billion last year and are expected to hit $5 billion this year — then $6 billion next year — with 19 consecutive years of revenue growth. Under Armour has incredible growth opportunity Internationally, as sales rose 68% last qtr but still account for just 15% of total revenue. Unfortunately there’s two issues the stock is dealing with. First, everybody knows this is an amazing growth story — thus the stock sells for an lofty 65 times earnings. Second, UA is having to spend to grow and thus profits are expected to climb around 10% for the second straight year. Sales grew just 28% last qtr as profits were just $0.01 a share, down from $0.04 in the year-ago period. My Fair Value is 45 times earnings or $27 a this year, $35 a next year. I want to buy UA and feel its a must own growth stock, but I’m not gonna overpay. |
One Year Chart |
 Last qtr profits fell 75% due primarily to the Sports Authority liquidation. Here’s the product category sales growth from the qtr:
The company was expected to make 4 cents, and missed those estimates by 3 cents. 2016 profit estimates got slashed from $0.67 to $0.59 (2017 & 2018 fell too). Qtrly estimates declined a little as well, and now analysts predict 9%, 17%, 25% and 400% profit growth the next 4 qtrs. That 400% growth is basically $0.05 vs the $0.01 the company made last qtr. |
Fair Value |
 Profits are expected to climb just 11% this year, but 32% next year. I’d like to pick this stock up before growth accelerates next year. UA currently sells for 49 times next years earnings — whoa. This stock really needs to come down to around $31 to get me excited — and that would still be 40x earnings. |
Bottom Line |
 Under Armour has immense growth opportunity, but this story is well-known and thus investors have bid up the shares in anticipation. As you can see from the ten-year chart, UA has been trying to digest its prior gains. Still, there’s a ways to go here. My goal is to buy this stock for the Growth Portfolio at or below $32. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
