This Just In: Upgrades and Downgrades

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At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and worst and sorriest, too.

And speaking of the best ...
Shares of Motley Fool Rule Breakers recommendation Under Armour (NYSE: UA) leapt 6% yesterday on news that Citigroup upped the stock to "buy". According to the analyst, UA bucked the trend of anemic retail sales in the holiday season, enjoying strong pre-Christmas sales at retailers such as Dick's Sporting Goods (NYSE: DKS) -- and it didn't have to discount its wares in the process. Citi also likes that UA is currently "trading at levels not seen since October 2006."

That sounds pretty good, especially when you consider that UA today is selling about 50% more than it was back in October 2006, and making about 40% more in profit. Better yet, the company is growing sales as fast now (in fact, slightly faster) as it was then. It makes $45 seem a steal.

Let's go to the tape
Of course, there's a reason why UA's looking so much like a bargain today, and why the number of analysts who rate the company a hold or sell equal those who call it a buy. A lot of people think Citi's got this one wrong, and that Under Armour will look as rusty as the rest of the retail sector when earnings come out later this month.

To gauge whether Citi's right and everyone else is wrong, or vice versa, we turn once again to CAPS for a glance at the banker's record. There, we find that Citi remains near the top of the investing heap, with an 89.70 CAPS rating -- thanks largely to picks like these:

Company	Citi Said:	CAPS Says:	Citi's Pick Beating S&P by:
AT&T (NYSE: T)	Outperform	****	18 points
Verizon (NYSE: VZ)	Outperform	****	12 points
Corning (NYSE: GLW)	Outperform	*****	13 points

Which would be mighty encouraging if Under Armour sold long-distance telephone service (or the equipment to provide it) instead of cutting-edge athletic wear. But how does Citi do when it comes to picking retail clothiers?

Company	Citi Said:	CAPS Says:	Citi's Pick Lagging S&P by:
Coach (NYSE: COH)	Outperform	***	41 points
Polo Ralph Lauren (NYSE: RL)	Outperform	**	26 points
VF	Outperform	***	10 points

Hmm. Seems Citi has a harder time figuring out what's hot and what's not in retail. Moreover, since a large part of Citi's investment thesis hinges on what it sees happening at Dick's, I couldn't help taking a glance at how well Citi's recommendation of that stock is faring. Turns out it's down 13% versus the S&P 500.

Foolish takeaway
Combine Citi's lackluster record in retail clothing with Under Armour's own stats -- the 46 P/E, the negative free cash flow, and the deteriorating growth expectations among analysts who follow the stock -- and I have to part ways with Citi on this one. Valuation-wise, I agree that the stock looks cheaper today than it did in October 2006. That still doesn't make the stock a smart buy in my book.

Agree? Disagree? Head on over to CAPS and let us know.