It can be profitable to invest in former high-flying stocks that have fallen on tough times -- assuming the companies' challenges primarily reflect temporary issues. The risk you accept in such situations is that operating trends may fail to improve, or even grow worse.

Under Armour (NYSE:UA) (NYSE:UAA) and Fitbit (NYSE:FIT) each fit in the "tough times" category. Both stocks have fallen by around 25% in the past year even as markets surged higher. Let's stack the two former Wall Street darlings against each other to see which makes the better buy today.

Under Armour vs. Fitbit by the numbers


Under Armour


Market cap

$6.7 billion

$1.1 billion


$5 billion

$1.6 billion

Sales growth



Profit margin






52-week price performance



Revenue and sales growth are over the 2017 fiscal year. Profit margin is for trailing 12 months. Data sources: Yahoo! Finance and company financial filings.

Difficult sales environments

Neither company enjoyed a strong 2017, but Fitbit's misfires have been far worse than Under Armour's. Sales collapsed by 25% over the past 12 months as the wearable device specialist struggled to adjust to consumers' rapidly shifting tastes.

A user interacts with his smartwatch.

Image source: Getty Images.

New product introductions like the Ionic smartwatch helped it boost average selling prices and increase profitability during the key holiday quarter. Yet Fitbit was upstaged by more-diversified rivals, including Garmin (NASDAQ:GRMN). The GPS device giant's gross margin rose to 56% of sales last quarter, compared to Fitbit's 44%.

Under Armour trailed rival Nike in important operating metrics, too, including sales growth. And, like Fitbit, it booked an overall loss for  2017. However, Under Armour's revenue still inched higher thanks to healthy demand in its overseas markets. And sales in the core U.S. segment stabilized during the holiday season, falling 4% year over year compared to a 12% slump in the prior quarter.

Outlook and valuation

That stabilization gave Under Armour CEO Kevin Plank confidence to project modest sales and profit growth in 2018. Revenue should climb at about the same 3% rate it did last year while profitability improves. The company should return to positive operating income after a rare loss for the quarter.

A jogger checks her fitness tracker.

Image source: Getty Images.

Fitbit, meanwhile, is forecasting another painful sales drop, with revenue expected to fall 7% to $1.5 billion following last year's 25% slump. Aggressive cost cuts likely won't be enough to generate positive earnings, either. In other words, Fitbit is still managing through a painful disruption in its business and it's not yet clear that the company will emerge with anything resembling its prior dominance in its niche. Under Armour's growth pace has taken a serious hit, too, but it's in generally better shape.

Investors might be tempted to pick Fitbit to buy since shares look so much cheaper these days. The stock has given up over 80% of its value since late 2015, after all. It can be purchased at 0.68 times sales --that's about half of Under Armour's valuation.

In my view, though, that discount doesn't outweigh the substantial risk that Fitbit will fail to rebuild its business via cost cuts and blockbuster product releases. Under Armour isn't likely to see robust growth in 2018, either. But the apparel giant is almost sure to be an important player in its industry in five years. We can't confidently say the same thing about Fitbit. If you're still looking for exposure to the wearables industry, it makes more sense to invest in a diversified, profitable company like Garmin instead.

Demitrios Kalogeropoulos owns shares of Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool owns shares of and recommends Fitbit, Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool has a disclosure policy.