Under Armour Inc (NYSE: UA)

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Under Armour Inc (NYSE: UA)

Under Armour Inc. Earnings Brief: What you need to know

Under Armour Inc. last reported earnings for the Fourth Quarter ending in December of 2014 in February with blowout results. The company posted a 37% gain in revenue the year prior while earnings per share soared 27%. The well known athletic apparel designer experienced an enormous growth rate in 2014 as shares of the company have nearly doubled since the beginning of 2014. Can this rapid growth continue?

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Since Under Armour’s last earnings report the company has made two unique acquisitions; both of which were fitness apps. The company spent $560 million dollars to purchase key brands, MyFitnessPal and Endomondo, enabling Under Armour to strategically position itself for the explosive market in nutrition and fitness monitoring and greater exposure to the European markets.

Kevin Plank, Under Armour’s CEO and Chairman had the following comments on the recent acquisitions in an earnings call transcript at Seeking Alpha:

“At the end of the day, the math is pretty simple, the more active someone is, the more likely they are to buy athletic apparel and footwear. And for the month of January, the four sites in our Connected Fitness platform, MapMyFitness, Endomondo, MyFitnessPal and UA Record, recorded more than 100 million workouts and added 4.2 million new unique users. So how do we come to this decision to invest in these communities and strategically add another tool and how we interact with our consumer?”

Analysts weigh in on the First Quarter results set to be released on April 21, 2015:

“We see no reason [Under Armour] couldn’t double market share over the next few years — every 1 percent of share adds 5 percent to [Under Armour’s] total [revenue],” said UBS Investment Bank analyst Michael Binetti.

Footwear remains the underlying driving force behind the company’s explosive growth with international exposure acting as the next big catalyst. Under Armour’s international business has nearly doubled in the last year and with an expectation of the world’s middle class to expand by more than two billion over the next 15 years it is critical that the company strengthen its foothold overseas.

Under Armour has received positive revisions on its stock from BAML upping the price target by $7 to $95 while maintaining the buy rating. The highest price target on the street comes out of Cannacord Genuity Corp, with a buy rating and a $97 target. Shares of Under Armour are currently trading higher by nearly $1 from yesterday’s close.

 

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