Under Armour (NYSE:UAA) continues to increase its presence in the athletic apparel and footwear market. The company has seen its annual sales rise by nearly 30% over the last three years, and in Under Armour's latest earnings conference call, CFO Brad Dickerson announced projected revenues of $2.26 billion by the end of 2013, representing further year over year growth of 23%. Even with all that growth, the question remains: is Under Armour ready to take on Nike (NYSE:NKE), its largest U.S. competitor?

Without question, Nike dwarfs Under Armour. Nike's annual revenues are projected to be $27.6 billion, more than 12 times that of Under Armour. Nike's market cap is $70.81 billion, which is eight times more than Under Armour's $8.57 billion. Nike has been growing at a steady pace, with a 10% annual revenue rise over the last three years. Recently, Nike announced a quarterly dividend increase of 14%, while Under Armour offers no dividends. And while Nike is a global brand, Under Armour still depends on North America for over 90% of its revenues.

Look out world!
Under Armour has begun to expand its global brand, most notably in China and Latin America. Consumers can find Under Armour products at the new Jing An Kerry Center in Shanghai, and the company opened a store in Mexico City in October. Under Armour also broke into the European market through its partnership with Tottenham Hotspur, a U.K. football club.

Under Armour is aggressively targeting the youth market. The company has partnered with many notable young athletes, including the NBA's Stephen Curry, the NFL's Cam Newton, and professional tennis player Sloane Stephens, to promote the Under Armour brand. According to Under Armour's CEO Kevin Plank, the company has a hit with its Alter Ego line which features characters from Marvel and DC Comics.

Product innovation and a unique advantage
Here at home, both companies emphasize product innovation to gain bigger footholds in the U.S. health and fitness industry--Under Armour's SpeedForm shoes and Nike's Flyknit footwear are two recent examples of such innovation. Under Armour also recently acquired MapMyRun and MapMyRide mobile apps and websites for $150 million to compete against Nike's FuelBand fitness apps.

There is one category, however, where Under Armour has little competition from Nike. The company's ColdGear Infrared line is targeted to the hunt/fish/camp market, and has been promoted on the popular television program "Duck Dynasty." ColdGear Infrared has helped Under Armour gain a larger share in that market, and Nike has yet to respond to this threat.

Under Armour is up for a fight
Nike isn't going away any time soon. It remains a solid company in the growing athletic footwear and apparel category. But Under Armour is a competitor that cannot be dismissed. Between the two, Nike is the safer company, but the one with greater potential looks to be Under Armour.


Fool contributor Johnny Chen has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. 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 has a disclosure policy.