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Under Armour (UAA): Stock Poised to Beat Earnings in Q4?

Under Armour, Inc.UAA , the developer, marketer and distributor of branded performance apparel, footwear, and accessories, is slated to report fourth-quarter 2016 results on Jan 31, 2017. The question lingering in investors' mind is whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 30%. Let's see how things are shaping up prior to this announcement.

Zacks Model Shows Likely Earnings Beat

Our proven model shows that Under Armour is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Under Armour has an Earnings ESP of 4.00% as the Most Accurate estimate stands at 26 cents, while the Zacks Consensus Estimate is pegged lower at 25 cents. So the positive ESP and the company's Zacks Rank #3 make us reasonably confident of an earnings beat.

Factors Influencing this Quarter

Under Armour's sustained focus on brand development, expansion of its DTC business, product innovation and foray into the technology-based fitness business bode well, as evident from its revenue growth of over 20% in the past 26 straight quarters.

At the moment, management expects net revenue for 2016 to be nearly $4.925 billion. This represents an increase of 24% over the 2015 level. Operating income is expected to be in the range of $440 million to $445 million, signifying growth of 8% to 9% over 2015.

However, Under Armour has been grappling with higher interest expense on account of higher debt level. In third-quarter 2016, the company's interest expenses increased to nearly $8 million in comparison to $4 million in the prior-year quarter. The company expects interest expenses to rise to roughly $30 million in 2016. We also noted that the company's debt in the third quarter increased to $1.07 billion from $902 million in the year-ago quarter.

Under Armour, Inc. Price, Consensus and EPS Surprise

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

Other Stocks Poised to Beat on Earnings Estimates

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Tractor Supply Company TSCO has an Earnings ESP of +1.09% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Michael Kors Holdings Limited KORS has an Earnings ESP of +2.45% and a Zacks Rank #2.

Yum! Brands, Inc. YUM has an Earnings ESP of +2.82% and a Zacks Rank #3.

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Yum! Brands, Inc. (YUM): Free Stock Analysis Report

Tractor Supply Company (TSCO): Free Stock Analysis Report

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

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

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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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