Under Armour Explodes on Solid Third Quarter Results

Shares of sport apparel company Under Armour were gaining like crazy on Tuesday after the company released its third quarter financial results.

Shares closed up almost 25% on staggering volume of over 12 million shares as the company revealed that revenue jumped 2.4% to hit $1.443 billion. Analysts had been expecting $1.41 billion. Net income also saw a growth of 40% to hit $75.3 million, or 17 cents a share. The company revealed earnings per share of 25 cents, easily beating the 13 cents that analysts had expected.

Traders were also cheering that the company has raised its guidance for the full year, now expecting 2018 adjusted earnings per share in the range of 19-22 cents compared to 16-19 cents before.

Chairman and CEO Kevin Plank remarked, “As we work through this chapter, we are staying sharply focused on our brand by connecting even more deeply with our consumers while delivering industry-leading, innovative products and premium experiences. Coupled with increasingly greater business discipline and resulting efficiencies, we continue to gain confidence in our long-term path and ability to deliver for our consumers, customers and shareholders.”

On a downside however, Neil Saunders, managing director of GlobalData Retail, wrote in a note, “Footwear has been a particular area of challenge and here we believe that Under Armour has lost significant market share to Nike NKE, +3.21% , which has been more innovative and focused with its product strategy.”

Footwear revenue was flat at $285 million, Under Armour Chief Financial Officer David Bergman said on the earnings call.

CFRA analyst Camilla Yanushevsky said Under Armour stock is “overvalued at current levels.” Her note read, “While we commend Under Armour’s impressive international sales growth and focus on tightening inventory, which decreased 0.6% to $1.2 billion in Q3, much progress in SKU [storekeeping unit] rationalization and reviving the North America segment remains to be made.”
Cowen however raised their price target from $18 to $21 with analyst Jonathan Komp rating the tock “outperform” with a $27 price target.

“The results demonstrate Under Armour’s ongoing progress toward becoming a more operationally excellent company.”

Disclaimer: We have no position in Under Armour Inc. (NYSE: UA) and have not been compensated for this article.