Why Jordan Spieth's Masters Performance Made Under Armour Happy

What Spieth just did at the Masters is an inkling of his future and what Under Armour did last year could just be the beginning of a run at Nike and Adidas, especially with major international growth ahead.

Apr 16, 2014 at 5:56PM

The Masters taught us three things. Lefties, like Bubba Watson, have a distinct advantage over righties on the majestic course (winning six of the last 12 titles), the golfing gods still wreak havoc, and Jordan Spieth is going to be a star for years to come. The 20-year-old took a valiant run at Tiger Woods' record as the youngest Masters' winner, but like his shot into Rae's Creek on hole 12, fell just short.

Jsua

One happy brand
However, Under Armour (NYSE:UA) , which is also young and positioned for a bright future, had to relish the moment. Spieth, its pitchman, got tons of exposure for the sportswear brand. The up and comer, which sold $2.3 billion in goods in 2013, watched the Under Armour-clad Spieth, logoed from head to foot, take center stage as he and Watson made their final romp around Augusta National.

At first, Spieth looked like the better man, but eventually "Amen Corner" wore him down. After the Green Jacket fell from grasp, he still left many predicting that he is destined to become the Tour's next big star.

UA, like Spieth, positioned for the long haul
With much less fanfare than Nike's (NYSE:NKE) signing of Tiger Woods or Rory McIlroy, Under Armour inked Spieth to a sponsorship deal in January 2013. Spieth may not generate the same excitement as Nike's Woods, but he's only 20, but seems poised for a long and solid -- if not spectacular career. The same could be said for upstart Under Armour. Who knows if the brand will ever reach the rarefied air and longevity of Nike, but it definitely looks ready to steal market share from Nike and Adidas.

Breaking out
Like Spieth, 2013 was a good year for Under Armour. Revenues increased 27% from $1.8 billion to $2.3 billion. Growth may slow a bit in 2014, but should still top the 20% rate. Apparel makes up a bulk of its sales (76%). In fact, in golf, the company only does apparel, not shoes or equipment. That may have been one reason it landed Spieth who wasn't forced to switch clubs. Footwear generates 13% of net sales, while accessories net 9%. All three categories grew over 25% in 2013.

Also, earnings per share have increased 31.7% (24% in 2013), while revenues have grown at 26.3% per year for the previous five years.

Leading the market
Currently, Under Armour leads the portion of the sportswear market known as synthetic performance wear with 60% share. The entire market is estimated to bring in $3 billion in overall sales. UA basically created this market with the invention of its compression wear. The performance wear geared toward use in differing temperatures (Heatgear, Coldgear, Allseasongear) commands higher margins due to its moisture-repelling technology.

Room to grow
Under Armour has lots of room to expand overseas. Currently, it generates about 6% of sales internationally, but plans to grow that to 12% by 2016. Revenue has climbed a little faster (around 27.8%) across the globe than in the U.S. As a point of comparison, Nike does about 57% in the U.S. and 43% internationally. Keep an eye on international sales as a percentage of overall revenues to gauge how UA's expansion is progressing.

Foolish takeaway
With a P/E ratio significantly ahead of peers Under Armour is a bit pricey, but if growth continues as expected, only slightly. The company is definitely worth holding if you already own it and buying if it dips on current market struggles. But if you're in it for the long haul (five years or more) don't be afraid to pull the trigger now. You're looking at lots of upside on this one and little risk with major international growth ahead.

6 stock picks poised for incredible growth
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Chris Brantley has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers