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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.
Today, 7:01 AM
- Apparel prices fell 1.1% in the U.S. during November, according to yesterday's CPI report.
- The drop followed a 0.2% slide in apparel prices for October.
- Retail analysts note that a higher mix of e-commerce sales and the lingering promotional haze threaten margin expansion in the sector, despite overall tighter inventory control.
- Apparel stocks: KATE, ANN, LULU, PVH, VNCE, CRI, UA, HBI, VFC, COLM, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL, ARO, AEO, ANF, WTSL, TLYS, CACH, ZUMZ, PSUN, EXPR, BKE, KORS, UA, GIII, SQBG, HBI, SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, PERY, DXLG, SHLD, BONT, GPS, GES, URBN.
Tue, Dec. 16, 8:31 AM
Fri, Dec. 12, 10:17 AM
- The S&P Retail ETF (XRT +0.5%) is out ahead of market averages again on enthusiasm over consumer spending forecasts.
- Today it's apparel/footwear sellers and department store chains with the broad set of gains.
- Gainers: Lululemon (NASDAQ:LULU) +2.7%, Ralph Lauren (NYSE:RL) +1.0%, Under Armour (NYSE:UA) +1.1%, Sequential Brands (NASDAQ:SQBG) +0.7%, Michael Kors (NYSE:KORS) +0.5%, Coach (NYSE:COH) +2.3%, Nike (NYSE:NKE) +0.7%, Deckers Outdoor (NYSE:DECK) +1.1%, Macy's (NYSE:M) +2.4%, Sears Holdings (NASDAQ:SHLD) +1.7%, J.C. Penney (NYSE:JCP) +1.5%, Nordstrom (NYSE:JWN) +0.8%.
Thu, Dec. 4, 10:31 AM
- Shares of Destination Maternity (DEST -7.8%) slide after the company misses earnings estimates.
- A frank assessment from the company on a misfire with its assortment to millennial-aged moms-to-be strikes a bit of a chord across the apparel and department store sector.
- Many of the earnings hits and misses this quarter have been tied to on-trend or off-trend assortments. A millennial group which is hard to nail down is becoming a bigger part of that puzzle.
- Apparel stocks: KATE, ANN, LULU, RL, PVH, VNCE, CRI, UA, HBI, VFC, COLM, KORS, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL, ARO, AEO, ANF, WTSL, TLYS, CACH, ZUMZ, PSUN, EXPR, BKE, KORS, UA, GIII, SQBG, HBI, SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, PERY, DXLG, SHLD, BONT, GPS, GES, URBN, TJX.
Mon, Nov. 24, 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.
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