What Makes Under Armour One of America's Best Companies

The 25 Best Companies in America
The 25 Best Companies in America

Everyone knows that special teams players get no love in the game of football. Unless you're Kevin Plank, that is, the founder and chief executive officer of athletic-apparel company Under Armour .

Plank's inspiration for the business came to him during a football practice at the University of Maryland, where he served as a captain of the special teams. Frustrated that his cotton t-shirts became wet and heavy when saturated with sweat, the self-proclaimed "sweatiest guy on the football field" did what all football players do after college graduation: He set off for New York City's garment district, on the hunt for synthetic materials that "wicked moisture and kept athletes cool, dry, and light."

In the years since its humble beginnings in the basement of Plank's grandmother's townhouse, Under Armour has grown into a billion-dollar company that's accomplished what few believed possible. It challenged Nike on its own turf and prevailed thanks to edgy marketing, Plank's perseverance, and the signing of top-shelf athletes like Baltimore's Ray Lewis and Boston's Tom Brady.

The case for Under Armour
There's little question that the company has made a name for itself among professional and amateur athletes alike. Thanks to its product's unique ability to keep athletes dry, Under Armour's logo is now omnipresent in gyms, locker rooms, and on sports fields throughout the country. And in the event that it doesn't live up to customers' expectations, the company's return policy has them covered: "If you are not 100% satisfied with your gear, return it for a full refund. Anytime. Any Reason. Guaranteed."

The Baltimore-based company's meteoric rise has also allowed to it attract talent. Employees characterize their coworkers as hardworking and collaborative.

This buy-in from both customers and employees has translated into superior investment returns for Under Armour's shareholders. Over the last five years, both the company's sales and share price have tripled. Top-line revenue grew from just over $600 million in 2007 to over $1.8 billion last year. And over the same time period, its share price went from roughly $15 per share up to more than $45 today. By means of comparison, the S&P 500, excluding dividends, gained a mere 13% over these five years. As my colleague Austin Smith recently put it: "This is a growing company in a growing space. ... People have gotten into this whole wellness, fitness revolution, and Under Armour is perfectly poised there."

Under Armour supports breast cancer charities, wounded soldiers, local Baltimore projects, and it even recycles plastic bottles as raw material into some of its apparel. It'll be important to see Under Armour continue to scale up its philanthropic work as its rapid growth continues. I'd be remiss if I didn't mention that, according to Forbes, Plank himself donates 10% of his own stock sales to the Cupid Foundation, which focuses on Maryland charities.

The Foolish bottom line
Under Armour isn't without flaws. Over the last few years, in fact, the primary issue that the company has run into concerned its inventory management, which recently alarmed investors and industry analysts but appears to have been righted in the meantime.

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The article What Makes Under Armour One of America's Best Companies originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Under Armour. The Motley Fool owns 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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