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UA stock: Under Armour Inc May Be Down, But It’s Not Out

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The last two weeks have been a sports lovers' dream. The Pittsburgh Penguins took home the Stanley Cup on Sunday, June 12. The U.S. Open Golf Championship kicked off four days later and then the Golden State Warriors faced off against the Cleveland Cavaliers in Game 7 of the NBA Finals on June 19.

Under Armour UA stock

Source: Hillel Steinberg via Flickr (Modified)

I would imagine Buffalo Wild Wings ( BWLD ) had its hands full, but that's a whole other topic. The reason I'm getting in touch today is because two of Under Armour Inc 's ( UA ) biggest celebrity endorsers battled it out in two of the above mentioned championships: Jordan Spieth and Stephen Curry.

Last year around this time, we saw UA stock soar as the NBA Championship kicked off with Curry in it and Spieth's fantastic year put a huge spotlight on the company. But this year is a bit of a different story. Neither Curry nor Spieth took home a win, so Under Armour stock didn't get the same kind of boost.

But just because UA athletes are down on their luck this year doesn't mean that the stock is, too.

UA Stock Isn't Out of the Game

Under Armour, the No. 2 sports apparel company in the United States, is one I've liked for a long time. The stock has performed tremendously in recent years, and while it has pulled back since hitting an all-time high of $52.95 in September, I don't think we've seen the end of the company's growth.

In the most recent quarter, UA reported a 63% year-over-year increase in earnings and a 30% increase in revenue to $1.05 billion. Apparel revenue was up 20%, and thanks to Curry's basketball and running shoe lines, footwear revenue was up 64%.

The company also has a lot of room to grow overseas. At the end of the first quarter, international sales accounted for 14% of total revenue, up 56% over the previous year.

But despite the strong growth, the stock took a hit at the end of April as Sports Authority, one of UA's top retailers, filed for bankruptcy and announced it would liquidate its 450 stores. UA stock fell 20% in a matter of weeks, taking out both its 50-day (the blue line) and 200-day (the red line) moving averages.

Then, at the beginning of June, the company announced it would only see about a quarter of the sales expected from Sports Authority and would take a $23 million impairment charge. Investors were caught off guard, as CEO Kevin Plank had somewhat downplayed that risk during the first-quarter earnings call.

From here, UA needs a spark. The stock is oversold and may struggle to break out of its current trading range in the near-term, but I have few doubts we'll see Under Armour stock back at its highs over time.

Curry didn't win the championship and Spieth isn't having the same kind of year as last, but Washington Nationals right fielder Bryce Harper signed the biggest endorsement deal for an MLB player with Under Armour in May, and he has a new shoe line set to drop on July 15.

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


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

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