Why Under Armour's Shares Spiked


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 sports apparel maker Under Armour (NYS: UA) were doing a touchdown dance today, jumping as much as 14% in intraday trading after the company reported second-quarter numbers.

So what: Look out, Nike (NYS: NKE) , because Under Armour's footwear sales helped propel the company's top line. Though shoes make up only about 19% of the company's total revenue, year-over-year growth from footwear sales soared 44% in the quarter. Total revenue grew 27% to $369 million, and the company increased its full-year sales outlook from a range of $1.78 billion to $1.8 billion to a range of $1.8 billion to $1.82 billion. Earnings per share for the quarter were $0.06 versus Wall Street estimates of $0.05.

Now what: The first six months of the year really aren't where it's at for Under Armour -- seasonally, business is slow and earnings per share are counted in pennies. So while the direction of the top line and the bullish increase in the full-year outlook are good signs, it'll be key that the good times roll through in the final two quarters of the year.

Similarly, it'd be premature to worry too much about the bottom line yet. Compared with the top line, profit growth was a relatively slow 7% as margins fell. But as we enter Under Armour's key quarters, investors will want to keep an eye on how sales are translating to profits.

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The article Why Under Armour's Shares Spiked originally appeared on Fool.com.

The Motley Fool owns shares of Under Armour. Motley Fool newsletter serviceshave recommended buying shares of Nike and Under Armour, creating a diagonal call position in Nike, and creating a bear put spread position in Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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