Why Shares of Under Armour, Inc. Were Looking Weak

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Under Armour, Inc.  (NYSE: UA  ) were coming up short today, falling by as much as 10% despite a strong earnings report as management hinted at a possible slowdown in sales growth on the earnings call. 

So what: The sportswear maker easily beat analyst estimates in another blowout quarter. Earnings came in at $0.06 a share following its split earlier this month, ahead of the consensus at $0.04, while revenue jumped 36% to $642 million, crushing expectations of $598.2 million. Shares were actually up in pre-market trading, but dipped when management said they saw sales growth slipping over the course of the year and that it would be a little behind last year's pace by the fourth quarter. 

Now what: Today's sell-off seems like more of a reflection of the high stock price rather than the company's performance, and looks like a textbook Wall Street overreaction, punishing a company for a strong quarter because it didn't raise guidance proportionally. Under Armour actually lifted its full-year revenue outlook by $40 million to $2.88 billion-$2.91 billion, equal to 24%-25% growth, and sees operating income growing by 25%-26%. Shares are certainly pricey at a P/E of 65, but I see no reason to sell after such a promising start to the year. Investors looking for a buying opportunity may want to take advantage of the dip.

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  • Report this Comment On April 24, 2014, at 2:37 PM, tyler91988 wrote:

    UA will be @$100+ by this time next year. Perfect time to buy on this dip.

    UA sales will get a boost from the start of spring sports, as well as Memorial Day weekend sales.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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9/2/2015 4:01 PM
UA $95.64 Up +2.48 +2.66%
Under Armour CAPS Rating: ****