Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of sporty apparel maker Under Armour
So what: Or at least that's what the headlines are saying. The reality is much different. For the second straight quarter, Under Armour blew past analyst estimates in reporting financial results. The retailer earned $0.23 on $312.7 million in Q1 revenue, which was up 36% year over year. Wall Street had been calling for $0.19 on $293.83 million in revenue, according to Yahoo! Finance data.
Now what: Traders and investors alike looked past that performance and management's higher guidance and focused instead on inventory, which rose 68% and ate into cash flow.
Having been bearish on the stock myself, I can understand investors' nervousness. And yet Under Armour has worked through inventory spikes in the past and come out fine. Should we really believe this time is different? Or is management simply stocking enough supply to meet sharply rising demand? My vote is on the latter.
Interested in more info on Under Armour? Add it to your watchlist.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. Both our Rule Breakers and Motley Fool Hidden Gems services have recommended members purchase shares of Under Armour. You can try any of our Foolish newsletter services free for 30 days.
Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.