Investors Turn to Thoughts of Time Travel as Under Armour Gains

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

In Back to the Future II, Biff Tannen, the jock-thug from the first movie, gives a sports almanac to his teenage self, allowing young Biff to bet on sports with 100% accuracy. By 1985, Biff is rich beyond imagination. Let's stop there and ignore all the horrific things that accompany the wealth -- death, deceit, destruction, other "D" words that are also bad. As an investor, don't you wish you had a newspaper from 2050, every now and then?

Today's results from Under Armour (NYSE: UA  ) would be a perfect chance to make bank. The stock is up more than 20% at midday. Actually, it seems like you might just sell the DeLorean.

Under Armour grows like kudzu
Under Armour's pop came from an incredible increase in earnings per share. Analysts expected the company to hit $0.53 per share -- it turned in $0.59. That was a 27% increase over the previous year and it came out of nowhere.

Well, that's not entirely true. Under Armour had a crazy-good year, with quarterly earnings per share rising between 26% and 160% in each of the prior two quarters. For the full year, earnings per share were up 24%. Biff -- if he hadn't already sold the DeLorean -- would be rich.

Recently, the company has had a series of announcements setting it up for a strong 2014 as well. New marketing partnerships, new spokespeople, and big-name teams have all helped build a platform for the year. In addition to U.S. sales, Under Armour is setting up for international growth. This year, it's announced a tie-in with Colo-Colo, an incredibly successful Chilean football -- U.S. soccer -- club.

Think of the exposure Biff could have had if he was able to make big international bets.

The success of 2013 puts Under Armour much further down the path to its 2016 goal of $4 billion in revenue. Under Armour forecasts between $2.84 billion and $2.87 billion in 2014, an increase of more than 20%.

The road ahead
Under Armour's success still pales in comparison to the size of Nike's empire. Nike generated $6.4 billion in revenue in the last quarter alone. While Under Armour is still earning 94% of its revenue in North America, Nike is international like Esperanto. The company made more than half of its revenue internationally.

Under Armour's advantage is speed of growth. That comes at an impressive premium right now, with the stock trading well more than 70 times the company's last 12 months of earnings. Nike is sitting at just 25 times its past year.

As a result, now might not be the best "buying opportunity" for Under Armour -- unless you are very, very confident in its abilities. Hopefully, the company will have a pullback sometime this year and offer investors a better in. There's still a lot of good news ahead for Under Armour, and it would be nice to benefit.

Another chance at success in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2817284, ~/Articles/ArticleHandler.aspx, 9/3/2015 1:18:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Andrew Marder

Andrew Marder worked in retail for years, holding jobs ranging from bookseller to bank strategy analyst. He has worked for the Motley Fool since 2012, and loves coffee.

Today's Market

updated Moments ago Sponsored by:
DOW 16,437.03 85.65 0.52%
S&P 500 1,952.75 3.89 0.20%
NASD 4,758.81 8.83 0.19%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 1:02 PM
UA $96.07 Up +0.43 +0.45%
Under Armour CAPS Rating: ****