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- Under Armour has achieved spectacular returns over the past five years.
- The company continues to execute well and grow sales and margins north of 30% YoY.
- However, all the growth is already priced in.
- Any slowdown could trigger a sell-off, prudent investors should wait for that time.
- Under Armour is growing very fast: Net income grew by 32% annually over the last five years.
- Under Armour's fundamentals look good as well: High return on equity, almost no debt.
- Based on two fair value approaches Under Armour is (slightly) overvalued at this price.
- Third quarter revenue was up 30%, marking the fourth consecutive quarter of +30% growth and 18th straight of +20%.
- Under Armour lost out on signing Kevin Durant but got nice consolation prize in basketball segment.
- International sales and women's segment continue to be an opportunity and see strong demand.
- Under Armour reported Q3 earnings and revenue ahead of estimates.
- FY 2014 guidance is also higher, but the expected growth is not enough to justify the current valuation.
- Reiterating my bearish view, looking for a 20% correction.
- Under Armour is set to report earnings for its third quarter of 2014 before the market opens on Thursday, October 23.
- Revenue growth is going to accelerate this quarter.
- Under Armour has outperformed the Wall Street profit forecast in 7 of the past 8 quarters.
- Analysts on Estimize are expecting gigantic growth from the thriving athletic wear company and a beat relative to the Wall Street consensus of 2 cents in EPS and $10 million in sales.
Under Armour Q3 2014 Preview: International And Ecommerce Driving Growth
- UA reports on Thursday. Consensus expects $0.70 EPS and $7.15b in revenue.
- International and ecommerce will be two key areas of focus.
- Looking for clues to FY15 guidance.
- Under Armour is gaining market share in the footwear industry.
- The company is growing faster in apparel sales than either Lululemon or Nike.
- Investors in Under Armour still need to watch the company's inventory for potential problems.
Under Armour's Cost Controls (Or Lack Thereof) Are Hurting EPS Growth
- UA shares are priced for much more earnings growth than revenue alone can provide.
- Gross margins are steady but operating margins continue to slowly decline.
- UA's SG&A expenditures are crimping profit growth and the company should reexamine its spending habits.
- UA has grown rapidly in recent years but so has its stock price.
- Shares are ahead of the business and with the stock pricing in 50% earnings growth, it's too expensive.
- I'm recommending staying away from UA or shorting it depending on your risk tolerance.
- Sports apparel upstart, Under Armour, is an incredible business to own.
- Competition is tight. Nonetheless, Under Armour stands a very good chance to perform well despite it being the underdog.
- The company continues to gain traction from younger customers.
- Investors should not neglect Under Armour as it has plenty of room for growth ahead.
What Under Armour Should Have Learned From Its Attempt To Sign Durant
- Under Armour made a play to sign Kevin Durant to a basketball shoe contract.
- Eventually, Nike re-signed Kevin Durant with an exclusive 10-year $300 million deal.
- Under Armour leaves Nike overpaying for Durant and continue its market dominance.
- On the other hand, Nike proves it has superior financial strength over Under Armour.
- This article discusses what both companies should have learned from their latest matchup.
- Under Armour's new products with improved technology can help the company get better in the future.
- Under Armour is focused on diversifying its user base, and it has increased its marketing budget to tap more customers.
- Under Armour is expensive on a trailing P/E basis, but its earnings are expected to grow at an impressive pace in the future.
- Nike matches or exceeds Under Armour offer for KD.
- Stock remains too expensive to own at the current price.
- Original thesis was bullish on the potential to add KD, but losing out on him turns the thesis bearish, especially for a high priced stock.
Under Armour: What Management Should Learn From KD's Decision To Stay With Nike
- Under Armour has grown significantly in Football, Running, Fitness, Women’s Apparel, Soccer, and other areas.
- After 4 years in the space, basketball has seen limited growth in both overall market share and as a portion of total revenues, coming in at .25% and 1%, respectively.
- Under Armour’s failure to sign Durant shows their failure to appeal to not only Durant, but the overall basketball market.
- Management should consider reallocating capital towards areas in which Under Armour already holds solid market share.
Under Armour's Ability And Intent To Pay A Dividend
- Under Armour currently pays no dividend and sports a market cap of $12 billion.
- Given the trend of active lifestyles, the company enjoys a widening customer base.
- Unfortunately, the shares are too richly priced, and a dividend would not be meaningful when compared to potential downside in the stock.
Is Under Armour Worth Considering At Its Current High Valuation?
- Under Armour has run up tremendously this year on the back of impressive growth.
- Under Armour's valuation is too high now, and its growth is expected to slow down in the coming five years.
- Under Armour is making smart moves, but the company's resources pale in comparison to its deep-pocketed competitors.
Under Armour: New Focus On Basketball And Women To Boost Sales And Justify Valuation
- Signing Kevin Durant would greatly increase current footwear share of 3% and basketball footwear share of 0.7%.
- Global campaign aimed at women is boosting women's category, a market that could rival men's apparel at the company.
- Second quarter was 17th consecutive quarter of revenue growth 20% or greater.
Is Kevin Durant Worth $285 Million To Under Armour?
- Under Armour offered Durant a 10 year $285 million endorsement deal.
- The company is looking to expand into basketball shoes.
- If this deal goes through, I believe it will be a boon for the company.
- Footwear and International are important categories where UA has limited penetration.
- Deal with Durant seems expensive but the upside in those categories are enormous.
- The recently run in UA makes the stock one to buy on dips instead of chasing from these levels.
Yesterday, 8:00 AM
- Piper Jaffray issues positive comments on Under Armour (NYSE:UA) after polling consumers.
- A survey from the investment firm indicated the brand has strong affinity with the running community.
- Under Armour hopes to grow footwear sales (including basketball) to over $600M per year by 2016.
- Piper issued an Overweight rating on Under Armour back in September.
- Shares of UA currently trade about 4.1% off their 52-week high with a P-E multiple that worries some analysts.
Thu, Nov. 6, 1:27 PM
- Apparel seller Ann issued a warning today on the impact of labor uncertainty at West Coast ports as part of its Q4 guidance.
- The retailer expects $8M in extra air freight costs due to product shipment delays.
- There's also been some reports of delays at ports in the Seattle and Tacoma area which account for 16% of container cargo traffic on the West Coast.
- Analysts fret that more companies will resort to air freight to ensure stores are stocked in front of the Black Friday rush.
- Apparel and footwear stocks: SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, KATE, ANN, PERY, LULU, RL, PVH, VNCE, CRI, UA, HBI, VFC, COLM, KORS, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL.
Thu, Oct. 23, 9:47 AM
- An earnings beat and a guidance lift isn't quite enough to drive shares of Under Armour (UA -2.1%) higher.
- Retail analysts note it's a question of valuation.
- Shares of UA trade at a forward P/E of 57 - compared to Nike's P/E of 24 with the Swoosh also growing net income at a faster clip.
- CEO Kevin Plank is on a conference call at the moment talking up the company's global prospects.
- Earnings call webcast
Thu, Oct. 23, 9:10 AM
Thu, Oct. 23, 7:12 AM
- Under Armour (NYSE:UA) reports direct-to-consumer revenue rose 35% Y/Y in Q3 to now rep 26% of total sales for the company.
- International revenue +104.2% to $90.35M.
- Apparel sales +25.6% to $704.6M.
- Footwear revenue +50.1% to $122M, powered by new basketball and running model introductions.
- Accessories sales +32.0% to $84.95M.
- Gross profit rate +120 bps to 49.6%.
- Inventory +35.9% to $637.46M.
- Guidance: UA sees 2014 revenue of $3.03B vs. $2.98M-$3.0B prior and $3.01B consensus.
Thu, Oct. 23, 7:05 AM
Thu, Sep. 25, 5:49 PM
- Nike (NYSE:NKE) guides on its FQ1 CC for FQ2 EPS to grow at a high-teen Y/Y rate; that's a above a consensus is for EPS to grow 12% to $0.66. FY15 (ends May '15) EPS is expected to grow at a high-20% rate; consensus is for EPS to grow 14% to $3.39.
- Following 18% growth in FQ1, the sports apparel giant now expects FY15 Greater China sales to rise at a low-to-mid teens rate; prior guidance was for high-single digit growth.
- Gross margin is expected to grow 125-150 bps Y/Y in FQ2 - 170 bps growth was seen in FQ1 - and forex headwinds are expected to go away later in FY15.
- NKE now +6.6% AH. Up in sympathy: UA +1.3%. FL +2.1%.
- FQ1 results, details.
Wed, Sep. 24, 8:13 AM
- Retail sales could increase by 4.5% to $986B this holiday season on an improved macroeconomic backdrop, forecasts Deloitte Touche.
- The mark would easily top last year's 2.8% rise.
- Online sales are tipped to rise by 14%.
- Promotional activity across broad retail has been dialed back a touch during the back-to-school season, but is still a risk to margins heading into the crucial shopping period.
- What to watch: This holiday season could be an operational pressure cooker for UPS (NYSE:UPS) and FedEx (NYSE:FDX) with demand expected to be high.
- Related stocks: AAP, AEO, ANF, BBBY, BBY, BJ, CHS, COH, COST, DG, FDO, FL, GPS, JCP, JNY, JWN, KSS, LB, LULU, M, NDN, PIR, RL, TGT, TIF, TJX, UA, URBN, VFC, WMT, ZLC, PERY, SQBG, VNCE, KORS, GIII, KATE, GIL, VRA, ICON, PSMT, AMZN.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, FDIS, PMR, UGE, RCD, SZK
Wed, Sep. 17, 9:42 AM| Comment!
Tue, Sep. 9, 9:23 AM
- A large patch of the retail sector will have their ears perked up this afternoon to see what Apple (NASDAQ:AAPL) delivers up with its iWatch announcement or teaser.
- Though the company's entry into wearable technology is considered nearly a certainty, the unknown variable is if the product will end up falling under the "gadget" category or be another Apple device revolution.
- Computerworld's Mike Egan is in the latter camp: "The iWatch should be most comparable to the Mac and the iPhone, Apple's two most stunning revolution."
- Forrester Research isn't waiting for details, forecasting 10M iWatch sales by 2016 - a mark which could dent demand for high-end watches.
- Showtime is 1:00 pm ET. (webcast)
- Luxury watchmakers: Movado (NYSE:MOV), Fossil (NASDAQ:FOSL), Swatch (OTCPK:SWGAY), Tiffany (NYSE:TIF), Richemont (OTCPK:CFRUY), LVMH Moet Hennessy (OTCPK:LVMHF), Hermes (OTCPK:HESAF)
- Wearable technology players: Sony (NYSE:SNE), Nike (NYSE:NKE), Samsung (OTC:SSNLF, OTC:SSNGY), Garmin (NASDAQ:GRMN), Basis (NASDAQ:INTC), Fitbit, Jawbone, Adidas (OTCQX:ADDYY), Under Armour (NYSE:UA).
Thu, Sep. 4, 9:30 AM
- It's either sour grapes or a tip-off on a clever strategy as Under Armour (NYSE:UA) CEO Kevin Plank reacts to the loss of NBA star Kevin Durant to rival Nike (NYSE:NKE) in the gigantic $350M basketball shoe deal which was disclosed last weekend.
- Plank says he takes pleasure in seeing the Oregon sports juggernaut pony up an extra $150M to land Durant.
- The exec thinks a strategic opportunity will open up elsewhere in the sports world with Nike's war chest diminished a bit.
Tue, Sep. 2, 12:39 PM
- Shares of Under Armour (UA +2.5%) trade higher after Nike snatches Kevin Durant away from its grasp with a renewed basketball shoe contract.
- The company has reportedly signed model Gisele Bundchen to a multi-year deal to help promote its women's products. Bundchen's husband, the New England Patriot's Tom Brady, is already in the Under Armour stable.
- What to watch: Retail analysts think the loss of KD isn't a large negative for Under Armour as it can strategically spread around the $30M/year endorsement spend it would have taken to land the basketball star.
Mon, Sep. 1, 7:15 AM
- Fending off a challenge from Under Armour (NYSE:UA), Nike (NYSE:NKE) holds on to the Oklahoma City Thunder's Kevin Durant, signing him to a new deal possibly worth $300M over the next ten years, and $350M over the next 20, reports the WSJ.
- With Durant's original 7-year, $60M deal set to expire, Under Armour had made an aggressive play for the superstar, but Nike had the right to match any offer and reportedly exceeded Under Armour's bid on Saturday night.
- Nike has the dominant share in the $4.5B basketball shoe market, and 2013 sales of Durant's Nike KD shoes of $175M compared to $300M for those under the name of LeBron James. Under Armour's total footwear net revenues were $299M in 2013.
Fri, Aug. 22, 10:17 AM
- Under Armour (UA +0.4%) has offered Oklahoma City All-Star Kevin Durant a 10-year basketball shoe contract worth between $265M and $285M, according to an EPSN report from earlier this week.
- Though Nike (NKE +0.4%) has had Durant under contract since 2007, the company is expected to let Durant go with Under Armour seen as paying a hefty premium just to gain some instant basketball shoe credibility.
- The Oregon sports juggernaut has another pretty solid reason to pass on matching Under Armour's offer with its Air Jordan brand still remarkably strong at 30.
Thu, Aug. 21, 10:46 AM
- Yoga apparel sales grew 45% last year while participation in yoga the sport was only up 4.5%, according to industry tracking.
- The disparity indicates the impressive momentum built up by the athleisure category is beyond just a fad.
- Barclays forecasts that the broader retail athletic apparel market will grow by around 50% to exceed $100B by 2020.
- The trend is positive for early adopters Lululemon (NASDAQ:LULU), Under Armour (NYSE:UA), Gap (NYSE:GPS), Nike (NYSE:NKE) - while a host of other retailers (LB, DKS, TJX, TGT) and department store chains (KS, BONT, DDS, M, JCP) say they will try to carve out space in the athleisure market for themselves.
- On tap: Designers have their eyes on creating more men's lines and hybrid yoga-business outfits that will fly in the C-suite.
Thu, Aug. 7, 11:36 AM
- Various media reports tip off that NBA All-Star Kevin Durant is close to signing a shoe endorsement deal with Under Armour (UA +0.3%) in excess of $30M per year.
- Durant's current contract with Nike (NKE -0.5%) ends later this week.
- Lebron James is the only other player in the NBA in the $30M/yr neighborhood.
- What to watch: If Under Armour nabs Durant away from Nike it would be the highest-profile signing of the company's history and could increase the odds that Durant plays for the Washington Wizards - not from Under Armour's HQ in Baltimore. As for the cost, the company has seen its top-line growth outpace marketing spending recently which gives it some room for brand-building.
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