Under Armour: Stay Long, The Story Is Still Intact

Jul. 28, 2018 4:05 PM ETUnder Armour, Inc. (UA), UAA24 Comments
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WG Investment Research


  • Under Armour reported Q2 2018 results that beat the top- and bottom-line estimates. Management also raised their full-year 2018 guidance.
  • It is important to remember that the company's revenue growth profile should be the focus through at least the end of 2018.
  • Under Armour's long-term story is still intact so I plan to stay long the stock.

Under Armour (NYSE:UA)(NYSE:UAA) is (and has been) a "show me" stock so investors should be encouraged about the fact that the company has reported impressive operating results so far in 2018. To this point, Under Armour recently reported strong Q2 2018 results that beat both the top- and bottom-line estimates. Additionally, the management team raised their full-year 2018 guidance. It was a classic beat and raise. As a direct result, the stock finished the trading day up ~4%, which brings the stock’s YTD performance to an outstanding 42%.

ChartUAA data by YCharts

While UAA shareholders have enjoyed a nice start to 2018, Under Armour’s long-term story is still intact so I believe that the stock still has room to run.

The Story Is Still Intact And The Q2 2018 Operating Results Prove it

During the Q4 2016 conference call, Mr. Kevin Plank, Chairman & CEO, made the following comment about his restructuring plans:

"Our goal is to take UA from a great brand with good operations to a great brand with great operations. We've got some work ahead of us, and we'll use 2017 to focus on increasing our operational discipline as we look to build out our $10 billion business."

Mr. Plank's restructuring plans revolve around structurally changing Under Armour's operations, while also focusing on creating a differentiated sports apparel company with its brand being the centerpiece. So far, so good.

A lot has been falling into place and the company's most recent quarterly results show that the restructuring efforts are already bearing fruit.

On July 26, 2018, Under Armour reported in-line Q2 2018 EPS (loss of $0.08) on revenue of $1.17B (beat estimates by $20M). The following were the highlights from the quarter:

  • Revenue up 8% YoY to $1.17B (7% on a currency neutral basis).
  • North America revenue
ChartUAA PS Ratio (TTM) data by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long UAA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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