Shares of Under Armour, Inc. ( UA ) hit a 52-week high of $121.43 yesterday on the announcement of its two-for-one stock split, the second since this sports apparel retailer went public in Nov 2005. The first stock split took place in Jul 2012.
The company's board of directors hinted that the additional shares in the form of a stock dividend will be distributed on Apr 14, 2014 to stakeholders of record as on Mar 28, 2014.
The principal aim behind the stock split is to make shares affordable to small retail investors. The move involves altering the number of shares outstanding and proportionally adjusting the share price. This makes the shares appear more reasonably priced, though the underlying value of the company remains constant.
In recent times, other companies have also announced stock splits. These include Westlake Chemical Corp. ( WLK ), which announced a two-for-one stock split and The Andersons, Inc. ( ANDE ), which declared a three-for-two stock split of its common stock.
Shares of Under Armour have been steadily moving up since this Zacks Rank #2 (Buy) company posted impressive fourth-quarter 2013 results amid an environment where many retailers grappled with aggressive promotional strategies at the expense of margins to gain market share during the holiday season.
Under Armour, which competes with Nike, Inc. ( NKE ), delivered quarterly earnings of 59 cents a share surpassing the Zacks Consensus Estimate of 54 cents, and increased considerably from 47 cents earned in the year-ago quarter. In the trailing 4 quarters, the company had beaten the Zacks Consensus Estimate by an average of approximately 40%.
Aided by strong performance of the Apparel, Footwear and Accessories categories, total revenue came in at $682.8 million, up 35% year over year and ahead of the Zacks Consensus Estimate of $620 million.
Under Armour's endeavors to keep itself on the growth trajectory, includes the acquisition of MapMyFitness, opening the first two UA Brand House retail outlets, and sustained investments to strengthen Women's, Footwear and International operations. Management now projects 2014 net revenue in the band of $2.84 billion to $2.87 billion, up 22% to 23% from the prior year.