Under Armour ($UAA) Good Price & Good Company ? Nike Better ?

JC888
2023-02-26

My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?

"Why not both" I asked myself ?

Wouldn't there be more upsides comparatively speaking ?

Having put the theory to test on different company types (see below for details); time to try it on Sports Apparel stock; that I have always been curious.

Putting  $Under Armour Class A(UAA)$ to the test & see if it still fits the bill.

Sidetrack: Below are stocks that I have covered. Interested ? Click to read.

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  • An American sportswear company of footwear and apparel

  • Founded in 25 Sep 1995 (27 years old company)

  • Founder was Kevin Plank

  • Then 24-year-old was a former special teams captain of University of Maryland football team.

  • Humble beginnings from the basement of his grandmother’s home in Washington DC

  • Towards end of 1996, he scored his first team sale with a $17,000 contract.

  • His keen observation of incorporating moisture-wicking synthetic fabric into T-shirt top was the “unique” selling point.

  • Very soon, other sportswear giants like Nike, Addidas & Reebok followed suit..

  • In 1997, Plank’s business has grown to the tune of $100,000 in orders.

  • In 1999, Plank’s big break came from Warner Brothers who contacted Under Armour to outfit two of its feature films - Oliver Stone's Any Given Sunday & The Replacements.

  • An advertisement placement in ESPN The Magazine; generated close to $750,000 in sales.

  • By 2003, private equity firm Rosewood Capital (consumer sector focused ) invested $12 million into Under Armour.

  • On 17 Nov 2005, Under Armour went public via IPO, at $13 per share.

  • From Nov 2013, Under Armour ventured into fitness equipment via strategic acquisitions of MapMyFitness, MyFitnessPal (Feb 2015) & Endomondo (2015).

  • Like they say, the rest is history..

In 2022, a year where US market had been hammered by extreme volatility and ease of covid pandemic restrictions - how did Sports Apparel stock - Under Armour fare ?

  • Revenue came in at $1.58 Billion vs $1.53 Billion (Q3 2022); that’s a +3.27% gain.

  • Income (GAAP) came in at $121.61 Million vs $109.66 (Q3 2022); that’s a +11% gain.

  • Earnings per share (GAAP) was $0.27 vs $0.23 (Q3 2022); that’s a +17% gain.

  • Earnings per share (non GAAP) was $0.16 (no comparison YoY info available).

Under Armour - Revenue segments contribution & growth

  • Under Amour might have its humble beginning with sports apparel. However it has grown & branched into other sports related ventures.

  • From the above table, apparel still generates the lion’s share of revenue (68.7%); followed by footwear (22.6%), accessories (6.7%) and finally licensing (1.9%).

  • In terms of growth, its footwear that’s leading the 4 segments with a +25% growth for the quarter.

  • The other 3 business segments dipped, growth wise.

Under Armour - Revenue by geographical regions

  • Of the 4 geographical divisions, both Latin America & Europe, Middle East, Africa (EMEA) registered revenue growth of +45% and +33% respectively.

  • While both North America & Asia Pac regions fell by -2% and -9% respectively.

Under Armour - Other highlights

  • Under Armour’s business & operations were affected during the covid years.

  • To mitigate, it has reduced the no of shops fronts from 98 to 96.

  • Conversely, it has scale up its presence in mixed environment to maintain brand’s visibility.

  • Management has coped and fared well in keeping expenses (at bay); down by -11%.

Under Armour’s CEO on Q3 2023 Results

We are pleased to have delivered solid third-quarter results and remain on track to achieve our full year operational and financial goals. Moving forward, I'm excited to partner with Stephanie Linnartz to advance our strategic consumer and product refinements further - leveraging Under Armour's strong brand to drive sustainable, profitable growth.. Under Armour, Interim CEO, Colin Browne

Is Under Armour A Good Price Or A Good Company ?

  • New incoming CEO - Stephanie Linnartz on 27 Feb 2023 will lead Under Armour digital growth to strengthen its bottom line.

  • The former Marriott executive’s experience leading Marriott’s multibillion-dollar digital transformation to accelerate the company’s digital initiatives will be called upon

  • As of 17 Feb 2023, Under Armour Inc had a $4.3 billion market cap, putting it in the 80th percentile of companies in the Apparel & Accessories industry.

  • Analysts expect adjusted earnings to reach $0.540 per share for the current fiscal year.

  • Analysts forecast a shift in consumer spending in the latter half of the year as covid-psychological barriers continue to disassemble.

  • Do you think Under Armour’s performance will be even better in H2 2023 ?

  • Do you think Under Armour is a worthy investment ?

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