Under Armour (UAA) AI Stock Analysis

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Under Armour

(NYSE:UAA)

50Neutral

Under Armour's overall stock score reflects financial struggles, with declining revenue and weak cash flow generation weighing heavily on the score. The technical analysis suggests a bearish trend, while valuation metrics are unfavorable due to ongoing losses. The earnings call provided some optimism with improved guidance and strategic focus, yet significant challenges remain in key markets.

Positive Factors

Financial Performance

Stronger than expected Q3 results have led to an increase in EPS forecasts.

Leadership

The hiring of Eric Liedtke as EVP of brand strategy is showing positive results, with improvements in brand strategy execution.

Strategic Adjustments

The increased FY25 guidance and a 25% SKU reduction indicate positive strategic adjustments.

Negative Factors

Market Valuation

Market-implied valuation casts doubt upon capacity to achieve the vision of topline stabilization and return to sustained profitable growth, although there is cautious optimism.

Product Focus

There was virtually no discussion of apparel, which makes up a significant portion of Under Armour's revenue, and too much focus on accessories and footwear.

Regional Performance

APAC region struggling, with sales in the region down 5% amid a highly competitive and promotional landscape.

Under Armour (UAA) vs. S&P 500 (SPY)

Market Cap

$2.43B

Dividend YieldN/A

Average Volume (3M)17.45M

Price to Earnings (P/E)―

Beta (1Y)1.08

Revenue Growth-7.47%

EPS Growth-131.70%

CountryUS

Employees6,800

SectorConsumer Cyclical

Sector Strength58

IndustryApparel - Manufacturers

Share Statistics

EPS (TTM)-0.31

Shares Outstanding188,822,720

10 Day Avg. Volume21,930,197

30 Day Avg. Volume17,452,160

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.52

Price to Cash Flow (P/CF)2.20

P/FCF Ratio2.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$8.89

Price Target Upside52.49% Upside

Rating ConsensusHold

Number of Analyst Covering18

Under Armour Business Overview & Revenue Model

Company DescriptionUnder Armour, Inc. (UAA) is a prominent American sportswear and equipment company that specializes in the design, manufacturing, and distribution of performance apparel, footwear, and accessories. The company operates in the athletic apparel sector and is known for its innovative use of technology and materials to enhance athletic performance. Under Armour's product offerings cater to a wide range of sports and activities, providing athletes and fitness enthusiasts with gear that combines style, comfort, and functionality.

How the Company Makes MoneyUnder Armour generates its revenue primarily through the sale of its branded performance apparel, footwear, and accessories. The company's revenue streams are diversified across wholesale, direct-to-consumer, and licensing operations. The wholesale segment involves selling products to retail stores and distributors, while the direct-to-consumer segment includes sales through Under Armour-branded stores and its online platform. Additionally, Under Armour benefits from licensing agreements that allow third parties to produce and sell products under the Under Armour brand. Key factors contributing to its earnings include strategic partnerships with athletes, sports teams, and events, which enhance brand visibility and consumer engagement. The company also invests in technology and innovation to maintain a competitive edge in the sportswear market.

Under Armour Financial Statement Overview

Summary

Under Armour is facing financial challenges with declining revenue and profitability. Despite a stable balance sheet with moderate leverage, its cash flow generation is weak, impacting its overall financial health. The company needs to focus on improving operational efficiencies and cash flow management to enhance its financial standing.

Income Statement

Neutral

Under Armour's TTM data shows a decline in revenue and profitability. The gross profit margin is approximately 47.5%, indicating a decent gross profitability, but the company is currently experiencing a net loss, reflected by a negative net profit margin of -2.52%. The EBIT and EBITDA margins are also weak at -2.25% and 0.29% respectively, indicating challenges in operational efficiency and profitability.

Balance Sheet

Neutral

The company has a moderate debt-to-equity ratio of about 0.66, suggesting a balanced use of debt and equity. However, the return on equity is negative, reflecting current financial underperformance. The equity ratio stands at 42.9%, indicating a stable financial structure with a reasonable level of equity in the assets.

Cash Flow

Negative

Under Armour's TTM cash flow statement highlights challenges in cash generation with a negative free cash flow. The operating cash flow to net income ratio is low, reflecting inefficiencies in cash generation from operational activities. The negative free cash flow to net income ratio further underscores liquidity pressures.

TTM	Mar 2024	Mar 2023	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
5.32B	5.70B	5.90B	5.68B	4.47B	5.27B
	Gross Profit
2.52B	2.63B	2.65B	2.86B	2.16B	2.47B
	EBIT
-119.60M	229.75M	283.81M	486.29M	-613.44M	236.77M
	EBITDA
15.34M	372.34M	421.43M	708.47M	321.30M	417.51M
	Net Income Common Stockholders
-134.07M	232.04M	386.77M	360.06M	-549.18M	92.14M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
165.96M	858.69M	711.91M	1.67B	1.52B	788.07M
	Total Assets
549.25M	4.76B	4.86B	4.99B	5.03B	4.84B
	Total Debt
17.91M	1.44B	1.52B	1.50B	2.01B	1.30B
	Net Debt
-148.05M	584.10M	809.27M	-165.15M	488.17M	511.15M
	Total Liabilities
136.40M	2.61B	2.86B	2.90B	3.35B	2.69B
	Stockholders Equity
412.85M	2.15B	2.00B	2.09B	1.68B	2.15B
Cash Flow		Free Cash Flow
-153.66M	203.64M	-197.71M	595.07M	120.57M	363.23M
	Operating Cash Flow
3.73M	353.97M	-9.91M	664.83M	212.86M	509.03M
	Investing Cash Flow
-116.73M	-105.33M	-152.80M	-68.35M	66.34M	-147.11M
	Financing Cash Flow
-158.16M	-78.69M	-126.38M	-418.74M	436.85M	-137.07M

Under Armour Technical Analysis

Technical Analysis Sentiment

Negative

Last Price5.83

Price Trends

50DMA

6.56

Negative

100DMA

7.69

Negative

200DMA

7.87

Negative

Market Momentum

MACD

-0.35

Negative

RSI

46.89

Neutral

STOCH

81.47

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UAA, the sentiment is Negative. The current price of 5.83 is below the 20-day moving average (MA) of 5.85, below the 50-day MA of 6.56, and below the 200-day MA of 7.87, indicating a bearish trend. The MACD of -0.35 indicates Negative momentum. The RSI at 46.89 is Neutral, neither overbought nor oversold. The STOCH value of 81.47 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UAA.

Under Armour Risk Analysis

Under Armour disclosed 36 risk factors in its most recent earnings report. Under Armour reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Under Armour Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KTB	71 Outperform	$3.04B	12.60	63.68%	3.71%	0.07%	7.19%
ZGN	66 Neutral	$2.82B	20.87	8.89%	1.86%	2.26%	-37.52%
COLM	61 Neutral	$3.63B	17.17	12.01%	1.83%	-3.35%	-6.09%
Sector *	60 Neutral	$6.54B	11.34	3.27%	4.27%	2.37%	-20.86%
VFC	53 Neutral	$4.07B	―	-16.13%	3.44%	-8.42%	57.91%
UAA	50 Neutral	$2.43B	―	-6.12%	―	-7.47%	-131.70%
HBI	49 Neutral	$1.55B	―	-43.06%	―	-29.44%	-1343.00%

* Consumer Cyclical Sector Average

Performance Comparison

UAA

Under Armour

5.83

-0.95

-14.01%

COLM

Columbia Sportswear

65.52

-10.51

-13.82%

HBI

Hanesbrands

4.40

-0.15

-3.30%

VFC

10.45

-2.08

-16.60%

KTB

Kontoor Brands

55.00

-0.78

-1.40%

ZGN

Ermenegildo Zegna

6.92

-4.67

-40.29%

Under Armour Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -29.25% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

While Under Armour's gross margin exceeded expectations and there were notable achievements in product launches and loyalty growth, significant declines in North America and APAC revenue, along with increased SG&A expenses, present challenges. The company's focus on repositioning and strategic adjustments shows promise but faces headwinds in certain regions.

Highlights

Strong Gross Margin Performance

The fiscal third quarter results exceeded expectations, driven by strong gross margin performance with an increase of 240 basis points year-over-year to 47.5%.

Revenue Exceeding Forecasts

Revenue surpassed forecasts with a decline of 6% to $1.4 billion, which was better than the expected 10% decline.

EMEA Region Growth

Revenue in EMEA increased by 5% or 3% on a currency-neutral basis, with growth in DTC and full-priced wholesale business.

New Innovative Products Launched

Launch of the Curry Brand athlete De'Aaron Fox's first signature shoe, the Fox 1, which features patented flow sole technology.

Increase in Loyalty Membership

During the quarter, Under Armour gained 4 million new loyalty members in North America, raising the total to 17 million.

Improved Full-Year Outlook

Full-year revenue expectation improved to a decline of approximately 10%, better than the previous outlook of low-double-digit contraction.

Lowlights

North America Revenue Decline

North America experienced an 8% revenue decline mainly due to a decrease in DTC business, affected by lower eCommerce sales due to reduced promotions.

APAC Revenue Decline

APAC revenue fell by 5% or 6% on a currency-neutral basis due to a highly competitive and promotional landscape.

Latin America Revenue Decline

Revenue in Latin America declined by 16% or 9% on a currency-neutral basis, mainly due to lower distributor sales.

Decrease in Direct-to-Consumer Revenue

Direct-to-consumer revenue declined by 9%, mainly due to a 20% decrease in eCommerce driven by reduced promotions and discounts.

SG&A Expenses Increase

SG&A expenses rose 6% to $638 million, including a $28 million impairment charge not included in the fiscal 2025 restructuring plan.

Company Guidance

During Under Armour's third quarter of fiscal 2025 earnings call, the company provided updated guidance, showing optimism as they exceeded expectations with a revenue decline of 6% to $1.4 billion, surpassing the anticipated 10% drop. Gross margin improved by 240 basis points to 47.5%, driven by supply chain benefits and reduced discounting. North America's revenue saw an 8% decline, and APAC faced a 5% decrease, while EMEA reported a 5% increase. The company raised its full-year outlook, expecting a revenue decline of approximately 10%, refining its gross margin projection to an improvement of 160 basis points, and increasing adjusted operating income to $185 million to $195 million. Adjusted SG&A expenses are projected to decrease at a low-single-digit rate as Under Armour continues to prioritize brand and operational investments.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.