Since joining the public markets in November of last year, sportswear maker Under Armour (NASDAQ:UARM) has treated its earliest investors to better than 150% appreciation on their investment. Can the winning streak continue? We'll get the latest update on the company's Q1 2006 performance early tomorrow morning, when Under Armour issues its second earnings report as a public company.

What analysts say:

  • Buy, sell, or waffle? Eight analysts follow Under Armour, but seven of them are still on the bench with hold ratings. The one with a real opinion says: Buy it.
  • Revenues. Analysts will be looking for 24% sales growth tomorrow, to $72 million.
  • Earnings. Profits are expected to come in at $0.07 per share.

What management says:
CEO Kevin Plank describes demand for his company's products as "very strong," noting back in February that sales of each of its product offerings -- broadly defined as "men's," "women's," and "youth" -- are growing. Last quarter, the greatest strength came from the latter two categories, while men's product sales rose only 15%. Not unexpectedly, the biggest sales gains came in the smallest business segment. For Under Armour, this segment covers revenue from licensees, and sales there grew 111% (to $2.9 million).

What management does:
I'm going to break with my usual practice of laying out for you a chart showing the "forecasted" company's margin trends -- simply because Under Armour has only been a public company, with publicly filed financials, for such a short time that the chart would be less than helpful. In the short term, however, we can note that in February, management saw incremental improvements in both gross and operating margins versus the fourth quarter of 2004.

One Fool says:
Under Armour management CFO Wayne Marino made a point of noting Under Armour's "significant improvements in managing inventory" last quarter. I'm not sure that I agree with that assessment, however. Consider:

Year-over-year increases

Sales

Inventory

Accounts Receivable

Q4 2005

25%

11%

38%

Q3 2005

32%

4%

52%
All data courtesy of Capital IQ, a division of Standard & Poor's. "Year-over-year" refers to the comparison between 2005 results and 2004 results.

Don't get me wrong. The dramatically faster increase in sales relative to inventories means there's really very little to "improve" about Under Armour's inventory management. That said, it actually looks like the company's performance in this regard was superlative in Q3 2005, but merely extraordinary in Q4 2005. While this might have been due to seasonality, it still doesn't strike me as an improvement.

The real improvement was in accounts-receivable management. Accounts receivable have been running a bit amok in recent quarters, but the company began to narrow the gap between A/R growth and sales growth last quarter.

Competitors:

  • Columbia Sportswear (NASDAQ:COLM)
  • Life Time Fitness (NYSE:LTM)
  • Nike (NYSE:NKE)
  • Russell (NYSE:RML)
  • Sara Lee (NYSE:SLE)

Sara Lee is a Motley Fool Income Investor pick, while Columbia Sportswear is a Motley Fool Hidden Gems pick. Whatever your investing style, the Fool has a newsletter service for you.

Fool contributor Rich Smith does not own shares of any company named above.