Under Armour Stock

Credit: The Motley Fool.

With shares of Under Armour (NYSE:UAA) sitting 33% below their 52-week-high set in September, including a 12% decline through the first three weeks of 2016, it seems an understatement to say the athletic-apparel specialist has had a rough few months.

But not without reason. Though Under Armour beat expectations and raised its full-year guidance in its third-quarter report in October, investors remain concerned over impending gross-margin pressure and, more recently, potential lost market share in its core U.S. apparel segment.

At the same time -- for better or worse -- investors are about to receive much-needed clarity on Under Armour's performance as it gears up to release fourth-quarter 2015 results before the bell next Thursday, Jan. 28.

So as a longtime Under Armour shareholder myself, I can't help posing the question: Even after its rough start, will 2016 be Under Armour's best year yet?

Yes, but ...
From a business standpoint, I think it's safe to answer that question with an unequivocal "yes." But I'll readily admit it remains to be seen whether the market chooses to recognize as much by driving Under Armour stock higher in the near term.

So for what, specifically, should investors be listening when Under Armour's report hits the wires?

For one, on the heels of achieving its first ever billion-dollar quarter in Q3, Under Armour finds its latest guidance calling for full-year 2015 revenue to come in at $3.91 billion, good for 27% growth over 2014. Meanwhile, operating income is expected to increase 15% to $408 million, including the net dilutive impact of its decision early in the year to spend $560 million to acquire fitness app makers MyFitnessPal and Endomondo. 

Given Under Armour's propensity for under-promising and over-delivering, however, it should come as no surprise that Wall Street wants even more; consensus estimates call for slightly higher full-year revenue of $3.92 billion, and net income is expected to rise a more modest 9.5% to $0.95 per share.

A victim of its own success
Under Armour management also offered further color during last quarter's call on what to expect in Q4.

First, footwear growth should continue to outpace that of the overall business, led by the launch of Under Armour's new Curry 2 basketball shoes. For perspective, as Under Armour's overall revenue climbed 28% year over year last quarter to $1.2 billion, footwear revenue simultaneously skyrocketed 61% to $196 million, marking a significant acceleration from the 41% and 40% year-over-year growth in footwear Under Armour achieved in its first and second quarters of 2015, respectively.

But that impressive shoe-centric acceleration wasn't without consequence. Keeping in mind that footwear gross margin is typically lower than apparel gross margin, the segment's higher growth also meant Under Armour needed to plan for higher-than-expected excess footwear liquidation sales in Q4. As such, Under Armour anticipates that the gross margin will decline roughly 100 basis points in the fourth quarter.

As I've argued before, however, that's not as concerning as it might seem. Then-CFO Brad Dickerson suggested at the time that, more than anything, "[I]t's really a kind of victim of our success to some degree, [and] this is just the normal process of managing inventory as you work through selling in and selling through, which both have been very positive for us on the footwear side."

Under Armour Connected Fitness

Under Armour's new chest strap, fitness band, and smart scale. Credit: Under Armour.

A Connected future
I would also like to hear updates on consumers' early interest Under Armour's latest Connected Fitness initiatives, namely its new suite of Connected Fitness products unveiled at the 2016 Consumer Electronics Show earlier this month. In contrast to Under Armour's largely digital efforts in the Connected Fitness space so far, these new products include a fitness band, an updated fitness chest strap, wireless headphones that promise not to fall out, and even a connected shoe and smart scale.

In addition, I want to know whether development on Under Armour's Amazon.com-esque consumer insight engine is continuing to progress as planned. Though Connected Fitness technically contributed just over $14.4 million in revenue last quarter, this insight engine should offer significant benefits to help Under Armour better cater and sell to its 150 million-member Connected Fitness community.

Looking forward
Finally, listen for any revisions to Under Armour's preliminary 2016 outlook provided last quarter, which calls for net revenue and operating income to grow 25% and 23%, respectively, over the same metrics in 2015. Both are in line with Under Armour's recently accelerated plan to nearly double annual revenue to $7.5 billion by 2018 and for all intents and purposes indicate that the company is expecting another banner year. 

Steve Symington owns shares of Under Armour. The Motley Fool owns shares of and recommends 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.