Simple Under Armour (UAA) Stock Analysis

   

 

Before I begin talking about Under Armour, Inc. please note the following:

 

  • I’m not an investment advisor
  • I don’t consider myself an investment professional
  • I don’t have formal investments training
  • I’m not getting paid by UA or anyone else for writing this
  • I am not on the board or affiliated with UA (I do own some of their stock, however).

 

So you say to yourself, “why should I bother reading his analysis?” Simple, because you LOVE ME J. UA designs sports clothing and accessories. It has been around since 1996 founded by Kevin Plank, CEO, who’s from Maryland and so is UA Headquarters. It’s market capitalization is almost $9B, which makes it a large cap company.

 

So Why Am I Talking About Under Armour

 

Well a couple of reasons. I want to actually write down the reasons why I decided to invest in it. And I want to see how I fare as a stock picker when I read this post several years down the line (this means that I am a long-term investor). As much as I am tempted to, do not like to look at stock prices on a daily basis. Anyway, reason #1 is potential growth. As mentioned, UA has a market cap of almost 9B. It’s competitors like Nike has almost 90B and Adidas almost 34B. I don’t know if UA will ever get to that level, but I think it has a lot of upside.

 

One reason for potential growth/upside is it recently over the past couple of years has received the endorsements of some major athletes including Bryce Harper, Cam Newton, Michael Phelps, Tom Brady, and many more. For a full list, see Baltimore Sun. Reason #2 is Revenue growth. Per the chart below  (click to expand), Revenue has gone up and Net income has gone up from 2015:

Currently UAA is trading at $20.71 with a P/E ratio of 46.1 (Per Investopedia “P/E ratio divides a stock’s share price by its earnings per share to come up with a value that represents how much investors are willing to shell out for each dollar of a company’s earnings.” As compared with Adidas and Nike whom have P/E’s of and 33.20 and 23.30 respectively, there is a greater demand for the purchase of UAA stock as investors are expecting faster growth….onward and upward!

 

It’s recently lost a lot in terms of its stock price with declining sales a large amount of inventory on hand. But, it has a huge opportunity to expand globally. Per The Motley Fool, “Nike currently gets just over half of its sales from outside geographies, which helps explain why Under Armour executives are so bullish about their long-term prospects.” Another aspect is footwear sales which have grown from 678M to 998M between 2015 and 2016 (Motley Fool Info.).

 

UA University Contracts

 

Currently UA has contracts with only some Universities, although still something to be very proud of. For example, out of the top 10 universities, UA has a contract with 4 out of 10 (click chart to expand) including Wisconsin, Notre Dame, Auburn, and South Carolina. However the top 3 universities make up almost half (44%) of the total of the top 10 contracts (see below and full article from Forbes at: College Contracts

So yeah, BIGTIME upside potential again!

 

From my personal experience as a consumer, I own a few pieces from UA and they all are of superb quality. My first was actually a gift from my brother, a black full zip hoodie. I have had it for several years now, and unlike other hoodies that I’ve owned in the past and gotten rid of, this one has maintained it’s shape and continues to keep me warm at times when it’s 40ish degrees and I think I would need a jacket on top. I lean on either side a lot thus putting weight on my elbows when I’m sitting down. Some of my sweatshirts have become thin in this area and I’ve actually torn a couple of shirts by doing this. But this UA one has some kind of special “Pointy Elbow Resistant Technology (PERL)” that can sustain this. Ok I made that term up, lol, but the truth is it has lasted me for years and is continuing to do so. Recently I bought some UA running shoes and I kid you not feels like I’m wearing a sweater on my feet!

 

Whether this stock is right for you or not is something you would have to determine. I just presented some facts and a taste of my personal experience.

Simple Money Man (SMM)

7 Comments

  1. Nice post – quick question, the CEO has recently gotten a lot of push back in the media for his favorable words towards the Trump administration. Some outspoken celebrity brand ambassadors like Dwayne Johnson also spoke out against the CEO. What type of impact do you think this’ll have on an already steadily declining stock?

    • Glad you stopped by! This was just a fluff piece by the way, lol j/k. But I think his comment was purely from a business point of view and one can’t say if he supports or doesn’t support the Administrations policies as a whole. I don’t foresee this specifically affecting the stock a lot, unless the media interprets his comments a whole lot differently.

  2. I really think that UA is the biggest threat to Nike. It’ll be interesting to see how they continue to pick up market share. Curiously I would have thought they would exploit Bryce Harper more since he’s one of the top young players in the game but maybe his down year caused them to not market as heavy. Anyway I’m a big fan of their products.

    • Yes! Products are the main thing right? They make quality gear. I think they have a long way to go to be on the same level as Nike and they’ve said they don’t want to necessarily be as big as Nike, which I kinda get. I’ve seen some Nike products and was surprised that either the quality has fallen big time or it may be a fake.

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