Under Armour Has Done It Again

Athletic apparel, footwear, and accessories manufacturer Under Armour (NYSE: UA  ) recently announced second-quarter earnings, and the results were most impressive, sending shares up more than 10% at the open. The Baltimore-based company managed to complete the trifecta for the second straight quarter, beating consensus revenue and earnings-per-share estimates and raising full-year guidance.

All signs coming out of Under Armour now indicate that the company's momentum in all of its major businesses is accelerating, and its premiere brand is gaining rapid consumer adoption around the world. Accordingly, Under Armour remains the best aggressive growth investment in all of retail.

Source: Company Facebook

A repeat success
For the second straight quarter, Under Armour announced a nearly flawless earnings report. On a year-over-year basis, the company grew second-quarter net revenue 34% to $604 million, which was well ahead of the average analyst estimate of $571.4 million.

On the earnings-per-share front, the company reported $0.08, which was slightly better than analysts' EPS expectations of $0.07. On a year-over-year basis, Under Armour's earnings and reported net income of $18 million remain unchanged, primarily due to "planned timing of marketing and innovation expenses."

However, management's decision to forsake short-term earnings to increase long-term revenue capabilities is clearly working. All of Under Armour's main businesses grew significantly in the second quarter. The company's largest apparel segment grew 35% to $420 million. The strength in apparel was driven primarily by new product offerings in categories like "golf, outdoor, running, training, and women's studio," according to the press release.

Under Armour's footwear segment grew 34% to $110 million thanks primarily to new product additions in running. Meanwhile, the company's accessories segment grew 18% to $60 million on strength in headwear.

Perhaps most impressive is that Under Armour continues to reach more consumers directly. On a year-over-year basis, the company's second-quarter direct-to-consumer business grew 38% and accounted for 31% of total net revenue.

Last but least is the company's strong international performance. In the second quarter, Under Armour grew its international sales a staggering 80% from last year.

Management raised revenue guidance for the year again. The company now expects to generates net sales of $2.98 billion-$3 billion in fiscal 2014, up from previous guidance of $2.88 billion-$2.91 billion. This new range represents revenue growth of 28%-29%.

Firing on all cylinders
After such a fantastic earnings report, which has helped shares to surge more than 50% in 2014 alone, investors may be wondering why they should consider Under Armour at current levels. The reasoning is simple: The company is doing everything right to become a true global competitor to Nike (NYSE: NKE  ) .

Right now the two companies could not be further apart in terms of scale. Nike, with sales of $7.4 billion in its most recent quarter, generates more in a quarter than Under Armour generates in a fiscal year. Also, more than 50% of Nike brand revenue is derived abroad,  while just 8% of Under Armour's net revenue comes from international markets.

While Nike is still the most recognizable sports brand on the planet, as the company's success at the recent World Cup in Brazil demonstrated, Under Armour has been aggressively building brand awareness in North America and gearing up for a sizable push abroad. The company's robust international sales growth in recent earnings reports indicates that Under Armour has found a successful approach to expanding internationally.

(Under Armour's ad slogan is what investors should be saying now.
Source: Company Facebook)

Bottom line
Under Armour has proved quarter after quarter that it is the most aggressive investment in all of retail and that it is simply one of the best long-term growth plays in the market. As Under Armour continues to execute flawlessly, investors have little reason to doubt the company's future success.

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