Under Armour Earnings Preview

Robert Eberhard, The Motley Fool
Updated

Under Armour (NYS: UA) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Jan. 26. Under Armour is a developer, marketer and distributor of branded performance apparel, footwear and accessories for men, women and youth.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Under Armour with 12 of 22 analysts rating it hold. Analysts don't like Under Armour as much as competitor Hanesbrands overall. Six out of nine analysts rate Hanesbrands a buy compared to nine of 22 for Under Armour. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.

  • Revenue Forecasts: On average, analysts predict $404.1 million in revenue this quarter. That would represent a rise of 34.2% from the year-ago quarter.

  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.61 per share. Estimates range from $0.57 to $0.67.

What our community says:
CAPS All-Stars are solidly behind the stock with 96.3% awarding it an "outperform" rating. The community at large backs the All-Stars with 91.9% granting it a rating of "outperform." Fools have embraced Under Armour and haven't been shy with their opinions lately, logging 1,098 posts in the past 30 days. Even with a robust four out of five stars, Under Armour's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Under Armour's profit has risen year over year by an average of 57.6% over the past five quarters. The company's gross margin shrank by 2.6 percentage points in the last quarter. Revenue rose 41.7% while cost of sales rose 49.1% to $240.4 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

48.4%

46.3%

46.4%

51.7%

Operating Margin

16.1%

3.9%

6.8%

11.7%

Net Margin

9.9%

2.1%

3.9%

7.6%

One final thing: If you want to keep tabs on Under Armour movements, and for more analysis on the company, make sure you add it to your Watchlist.

At the time thisarticle was published The Motley Fool owns shares of Under Armour. Motley Fool newsletter services have recommended buying shares of 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.

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