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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
What do you call it when a couple of big bankers corner a small-cap stock in the locker room and punish it with a pair of downgrades? I call it the "Wall Street Wedgie" -- and Barclays and FBR Capital gave one to Under Armour (NYSE: UA) yesterday.

After noticing the stock had sprinted well ahead of the market since reporting "disappointing" earnings last month, Barclays declared the stock now fairly valued, and downgraded it to "equal weight." No sooner had it done so than FBR joined in the fun. While admitting that Under Armour "has meaningful room to grow domestically (and internationally longer term)," FBR argued that the recent run-up in share price "largely captures Under Armour's positive longer-term growth characteristics, prompting us to move to the sidelines."

FBR's also concerned about the expense Under Armour will incur in building out its retail network, suggesting that "investors are likely to take a pause in what is being viewed as an investment year." Which kind of flies in the face of the fact that Under Armour's shares have risen 20-odd percent over the past few weeks. Maybe FBR is sitting on the sidelines. Investors, in contrast, have been standing on an escalator -- going up.

Until now, that is. Their confidence shaken by the twin downgrades, investors sold off Under Armour shares by more than 5% yesterday. And for good reason, as we're about to see.

Let's go to the tape
Within the Textiles, Apparel and Luxury Goods sector under which Under Armour is usually classified, FBR and Barclays are two of the best analysts in the business. While elsewhere in the market they have proven as fallible as the next guy -- see FBR's ill-fated endorsement of Qualcomm (Nasdaq: QCOM) last year or Barclays' disastrous recommendation to buy Citigroup (NYSE: C) the year before -- these bankers can make the impressive boast of having been nearly perfect (at least, never within the three-plus years that we've been tracking them) in the textiles sector.

FBR's been right about both its picks in this sector -- Nike (NYSE: NKE) and True Religion so far. Barclays' right-eous record runs even longer, from Coach (NYSE: COH) to Columbia (Nasdaq: COLM) to V.F. Corp. (NYSE: VFC), Barclays is batting nearly 1.000:


Barclays Says:

CAPS Says:

Barclays' Picks Beating S&P by:




9 points

Columbia Sportswear



22 points

VF Corporation



26 points

Impressed yet?
I know I am. Perfection is a rare thing in stock investing ... but it's also fleeting. And the more I look at Under Armour, the more I'm convinced that this is going to be the stock that ruins the records of both FBR and Barclays.

Why? Because the numbers practically demand it. Sure, Under Armour looks a little pricey on the surface: 33.1 P/E, 21.6% estimated annual five-year growth rate. I think you'll agree that if you dig a little deeper -- scratch "Under" the surface I might say -- Under Armour is actually a much bigger bargain than meets the eye.

Consider: While Under Armour reported only $47 million in "profit" earned over the past 12 months, it actually generated some $99 million in free cash flow. Applied to the firm's $1.49 billion market cap, that works out to about 15 for the company's price-to-free cash flow (and when you consider the size of the firm's cash stash, the enterprise value on this one is even lower). Fifteen times free cash flow seems to me more than a bargain price for a 20 percent-plus grower.

Foolish final thought
And it's not just me saying so, either. As recently as three weeks ago, Barclays itself was telling investors to buy Under Armour. But perfect record or no, the fact that Barclays was right then does not mean it is right now. Not when it's saying the opposite now.

My advice: Barclays was right the first time. Under Armour was underpriced three weeks ago. And even after it's run-up, it remains a bargain today.

V.F. is a Motley Fool Income Investor selection. Coach is a Stock Advisor selection. Columbia Sportswear and Under Armour are Motley Fool Hidden Gems recommendations. Also, Under Armour is a Rule Breakers recommendation and The Fool owns shares of Under Armour.

Fool contributor Rich Smith has no position in any of the stocks named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 683 out of more than 160,000 members. The Motley Fool has a disclosure policy.