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Forget the Noise: Under Armour, Inc. is a Buy

Shares of athletic apparel, footwear, and accessories manufacturer Under Armour (NYSE: UA  ) have been on quite a run since the depths of the "Great Recession", up more than 700% since 2009 and 60%-plus in the past year alone. However, after reporting first- quarter earnings in April, shares of Under Armour have corrected more than 20% from all-time highs. What Wall Street is ignoring is that those same results were fantastic an included raised guidance, and strong sales momentum for the month of April. Under Armour remains one of the best long-term growth investments in general and is a prime buying opportunity at current levels. 

Source: Under Armour Facebook

Too good?
In one of my recent articles, I discussed how Under Armour has become a victim of its own success. The company has grown at such a rapid rate over the years that investors and analysts now expect too much from it.

In the first quarter, Under Armour grew revenue an impressive 36%. The company also raised guidance for fiscal 2014 to $2.88 billion-$2.91 billion in sales, representing 24%-25% growth year over year. Therein lies the problem. Although impressive, these numbers mean that Under Armour's sales momentum will slow dramatically from the first quarter's blistering pace of 36%.

Still an industry leader
It is beneficial to compare Under Armour to competitors like lululemon athletica (NASDAQ: LULU  ) and Nike (NYSE: NKE  ) , which are growing well but not nearly as fast.

Lululemon is in the midst of a challenging turnaround, one in which management refuses to offer details about. The company has made significant strides expanding current brands like its youth-oriented Ivivva label as well as introducing new ones such as its versatile &go line.

However, when pressed for specific growth goals by analysts at a recent investors' conference, Lululemon management refused to go into detail about the company's future plans, which has created a great deal of uncertainty for investors.

Nike, on the other hand, is firing on all cylinders as it prepares to benefit immensely from the 2014 FIFA World Cup in Brazil. With several new product introductions, including the company's revolutionary new soccer cleat Magista, Nike is set to dominate the tournament and enhance its already powerful positioning atop the athletic-footwear industry. 

The following is a breakdown of all three companies' expected growth over the next year:


Revenue Growth 2014

EPS Growth 2014







Under Armour



(Source: Yahoo! Finance)*Lululemon fiscal year ended January, Nike fiscal year ended May 2015 represented above

Strength in April
As was mentioned prior, recent information indicates that Under Armour's strong sales momentum is continuing into the spring. According to the Baltimore Business Journal, Under Armour grew both its signature apparel segment and its up-and-coming footwear segment by 25% in April.

While the apparel and footwear segments grew at more robust rates overall in the recently reported quarter, 33% and 41%, respectively, April performance was very impressive and represented some of the largest gains in sportswear for the month.

Source: Under Armour Facebook

Bottom line
For long-term growth investors, an important aspect to look for is overall momentum. There is not a more capable company in the industry right now than Under Armour in this regard.

The company has consistently beat analyst estimates and raised guidance. In fact, the only thing standing in the way of Under Armour is the company's own prior success, as it will always be compared to its past achievements. However, for investors seeking an overall positive growth story, there is none better than Under Armour.

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Philip Saglimbeni

Philip is an avid investor and writer. He contributes to The Motley Fool and Seeking Alpha. You can follow Philip on Twitter @philsags.

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