Under Armour (UAA) Beats on Q1 Earnings, Reiterates '18 View

Shutterstock photo

Under Armour, Inc. UAA reported break-even earnings per share in the first quarter of 2018, which compared favorably with the Zacks Consensus Estimate of a loss of 5 cents and the year-ago loss of a cent.

Following robust demand in Europe, the Middle East and Africa (EMEA), Asia-Pacific and Latin America, the company's top line increased 5.9% to $1,185.4 million, beating the consensus estimate of $1,122 million. In the past three months, the company's shares have surged 30.1%, compared with the  industry's  gain of 7.5%.

Apparel sales rose 7.1% to $766.3 million, while Footwear net revenues inched up 0.8% to $271.8 million in the quarter under review. Net revenues in the Accessories category were up 3.4% to $92.2 million, while Licensing revenues rose 8.8% year over year to $26.3 million. Moreover, the company's Connected Fitness segment reported a year-over-year increase of 34.4% to $28.8 million.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. Price, Consensus and EPS Surprise | Under Armour, Inc. Quote

North America net revenues dropped 0.4% to $867.5 million, while the same from EMEA, Asia-pacific and Latin America jumped 23.4%, 34.6% and 21% to $126.9 million, $115.6 million and $46.5 million, respectively.

Also, gross margin contracted 120 basis points (bps) to 44.2% due to aggressive inventory management that offset favorable foreign exchange fluctuation. Adjusted gross margin shrunk 60 bps to 44.8%.

Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of $283.6 million, up 64.8% from the prior-year quarter. Long-term debt was $758.7 million compared with $784.1 million a year ago. Shareholders' equity at the end of the quarter was $2,017.7 million.

2018 Guidance

Management reaffirmed the full-year 2018 outlook. The company expects 2018 revenues to increase by low single-digit percentage rate. While revenues from North America are likely to decline by mid-single-digit, international revenues are likely to increase more than 25%. The Zacks Consensus Estimate for revenues is pegged at $5.11 billion.

This Zacks Rank #3 (Hold) company continues to anticipate adjusted gross margin growth of nearly 50 basis points to 45.5%. This improvement can be attributed to lower promotional activity, product costs, channel mix as well as variation in foreign currency.

Adjusted operating income is expected around $130-$160 million. The company projects interest expenses of about $45 million. Capital expenditures are anticipated to be nearly $225 million, compared with $275 million in 2017.

Management expects adjusted earnings per share in the range of 14-19 cents per share. The Zacks Consensus Estimate is pegged at 17 cents per share, which is well within the company's guided range.

Stock to Consider

Tailored Brands, Inc. TLRD has a long-term earnings growth rate of 16.5% and a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here .

Cherokee Inc. CHKE has a long-term earnings growth rate of 15% and a Zacks Rank #2 (Buy).

Michael Kors Holdings Limited KORS has a long-term earnings growth rate of 7% and a Zacks Rank #2.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Michael Kors Holdings Limited (KORS): Free Stock Analysis Report

Cherokee Inc. (CHKE): Free Stock Analysis Report

Tailored Brands, Inc. (TLRD): Free Stock Analysis Report

Under Armour, Inc. (UAA): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: KORS , CHKE , TLRD , UAA

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?