Core Insights - Under Armour, Inc. (UAA) is undergoing a strategic transformation focusing on direct-to-consumer (DTC) model, product innovation, and global expansion to achieve sustainable growth and profitability [1][2] DTC Model and Customer Engagement - The company is prioritizing premium positioning and enhancing customer loyalty through a data-driven retail experience, which is deepening consumer engagement and strengthening market presence [1] - Under Armour has shifted its DTC approach to focus on full-price sales, reducing promotions and discounts, which has led to increased average unit prices and overall order values, thereby enhancing profitability [5] - The loyalty program has seen significant growth, with 4 million new members in Q3 of fiscal 2025, bringing total North American members to 17 million, resulting in stronger customer retention and deeper brand engagement [6] Product Innovation and Global Expansion - Under Armour is enhancing its premium status through product innovation, with new releases like the Fox 1 basketball shoe and UA Icon Heavyweight Hoodie resonating with younger consumers, driving strong sell-through and margin improvement [8] - The marketing strategy has been refined to include grassroots initiatives and influencer partnerships, with a focus on international markets in EMEA and APAC to drive localized growth [9] Financial Performance and Outlook - The company has achieved a 240-basis-point increase in gross margin during the fiscal third quarter, reaching 47.5%, driven by reduced promotional activity and lower costs [10] - Under Armour has updated its fiscal 2025 guidance, expecting a low-single-digit percentage decline in adjusted selling, general and administrative expenses, and raising its adjusted operating income forecast to $185-$195 million [11][12] Valuation Perspective - Under Armour is currently trading at a low price-to-sales (P/S) ratio of 0.49, indicating potential for investors seeking attractive entry points, with a Value Score of A highlighting its value appeal [13] - Despite a recent share decline of 11.3%, Under Armour has outperformed the industry's decline of 19.4% [14]

Core Insights - Under Armour (UAA) has a strong history of exceeding earnings estimates and is well-positioned for continued success in upcoming quarterly reports [1][2] - The company has achieved an average earnings surprise of 112.28% over the past two quarters, indicating robust performance [2] Earnings Performance - In the most recent quarter, Under Armour reported earnings of $0.08 per share, surpassing the expected $0.03 per share, resulting in a surprise of 166.67% [3] - For the previous quarter, the consensus estimate was $0.19 per share, while the actual earnings were $0.30 per share, leading to a surprise of 57.89% [3] Earnings Estimates and Predictions - Recent estimates for Under Armour have been revised upwards, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating potential for another earnings beat [6][9] - The current Earnings ESP for Under Armour is +20.75%, suggesting analysts are optimistic about the company's earnings prospects [9] Zacks Rank and Success Rate - Under Armour holds a Zacks Rank of 2 (Buy), which, combined with a positive Earnings ESP, suggests a high likelihood of beating earnings estimates [9] - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% success rate in exceeding consensus estimates [7]

If you'd like to learn more about how to best position yourself in under valued stocks mispriced by the market to start Q2, consider joining Out Fox The Street .Analyst’s Disclosure: I/we have a beneficial long position in the shares of UA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned ...

Company Performance - Under Armour, Inc. (UAA) has experienced a significant decline in its stock price, dropping 24% over the past three months, which is worse than the Zacks Textile – Apparel industry's decline of 20.6% and the broader Consumer Discretionary sector's drop of 5.2% [1] - The stock closed at $6.35, which is 46.6% below its 52-week high of $11.89, and is trading below its 50 and 200-day simple moving averages of $7.25 and $7.95, indicating bearish sentiment [4][6] Revenue Challenges - UAA reported a 5.7% year-over-year decline in overall revenues for Q3 of fiscal 2025, totaling $1.4 billion, with North America experiencing a 7.8% revenue drop due to a strategic pullback in e-commerce promotions [5][7] - Wholesale revenues decreased by 1% to $704.8 million, while direct-to-consumer (DTC) sales fell by 9.1% to $672.9 million, with e-commerce revenues dropping 20% [7][8] - International sales also saw a decline of 1.4%, with specific regions like Asia-Pacific and Latin America facing drops of 5.1% and 15.5%, respectively [7] Strategic Initiatives - Under Armour is focusing on transforming its DTC business by emphasizing full-price sales and premium brand positioning, which has led to increased average unit retail prices and order values [10] - The company's loyalty program has grown significantly, with 4 million new members in Q3, bringing the North America membership base to 17 million, enhancing consumer engagement and repurchase rates [11] - A flagship store in Baltimore serves as a testing ground for optimizing consumer experiences, with insights applied across its North America and global retail locations [12] Margin and Financial Outlook - UAA achieved a 240-basis-point increase in gross margin to 47.5% in Q3, attributed to reduced discounting and lower product costs [13] - The company revised its fiscal 2025 guidance, expecting a low-single-digit percentage decline in adjusted selling, general and administrative expenses, and projecting adjusted operating income between $185 million and $195 million [14][15] Valuation Perspective - UAA is currently trading at a low price-to-sales (P/S) ratio of 0.53, significantly below the industry average of 1.76 and the sector average of 1.66, indicating potential for investors [17] - The company's Value Score of A highlights its attractiveness as an investment option despite recent challenges [17][20]

Core Viewpoint - Under Armour (UAA) has experienced significant selling pressure, resulting in an 18.6% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted, indicating potential for recovery [1]. Group 1: Technical Analysis - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - UAA's current RSI reading is 24.76, suggesting that the heavy selling may be exhausting itself, which could lead to a price rebound as the stock seeks to return to its previous equilibrium [5]. Group 2: Fundamental Analysis - There has been a strong consensus among sell-side analysts to raise earnings estimates for UAA, with a 12.5% increase in the consensus EPS estimate over the last 30 days, indicating potential price appreciation in the near term [6]. - UAA holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the stock's potential for a turnaround [7].

Core Viewpoint - Under Armour (UAA) has experienced significant selling pressure, resulting in an 18.4% stock price decline over the past four weeks, but analysts anticipate better earnings than previously expected, indicating potential for recovery [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - UAA's current RSI reading is 27.24, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5]. Group 2: Fundamental Indicators - There has been a strong consensus among sell-side analysts to raise earnings estimates for UAA, leading to a 12.9% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6]. - UAA holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [7].

Core Viewpoint - Under Armour is undergoing a significant transformation under the leadership of Kevin Plank, focusing on brand repositioning, product innovation, and market expansion, particularly in China, to enhance its competitive edge in the sports apparel industry [4][10][21]. Group 1: Company Overview - Under Armour was founded by Kevin Plank, who initially promoted the brand within his network of athletes, leading to organic growth through word-of-mouth [4]. - The company has achieved a revenue of $5.7 billion in FY2024, despite a 3% decline year-over-year, indicating a recovery to pre-transformation levels [5]. - Under Armour is one of the four global companies capable of producing a wide range of sports equipment and accessories, making it the youngest among them [6]. Group 2: Brand Strategy and Innovation - Kevin Plank emphasizes the importance of innovation and has introduced significant changes, including reducing inventory units by 25% and streamlining fabric choices, which has improved gross margins [8][10]. - The company is focusing on a new brand positioning called "Being an Underdog," which aims to resonate with consumers who identify with the challenges of not being the biggest or fastest [16][18]. - Under Armour plans to invest $500 million to promote this "Underdog" brand spirit, targeting young and promising athletes [17]. Group 3: Market Expansion and China Strategy - Under Armour's penetration in the Asia-Pacific market is only 2%, with China contributing about half of this, indicating significant growth potential [22]. - The company aims for "measured growth" in China, focusing on high-quality experience stores and e-commerce strategies to cater to the demand for premium sports products [22]. - The opening of the first flagship store in Shanghai has led to a threefold increase in sales for the CURRY brand in China, showcasing the effectiveness of localized marketing strategies [23]. Group 4: Consumer Engagement and Product Development - Under Armour is compressing its product launch cycle from 18 months to 9 months to respond more quickly to market changes and consumer needs [12]. - The company is also focusing on creating products that combine functionality, comfort, and style, appealing to a broader audience [19]. - A dedicated design center in Shanghai will help the company better understand the needs of young Chinese consumers, with local designs accounting for 20-25% of the product offerings [24].

Valuation and Market Performance - Under Armour, Inc. (UAA) is currently trading at a low price-to-sales (P/S) multiple of 0.60X, significantly below the industry average of 2.22X and the sector average of 1.84X [1][3] - In the past month, UAA stock has declined by 14.2%, compared to a 5.2% decline in the industry, contributing to its undervaluation and making it appealing for investors [4] Strategic Transformation and Loyalty Program - Under Armour has transformed its direct-to-consumer (DTC) business by focusing on full-price sales and reducing promotions, which has improved average unit retail and order values [6] - The company's loyalty program has added 4 million new members in Q3 of fiscal 2025, bringing the total to 17 million in North America, enhancing repurchase rates and brand engagement [7] Gross Margin Improvement - Under Armour achieved a 240-basis-point improvement in gross margin, reaching 47.5%, driven by reduced discounting, lower product and freight costs, and favorable currency fluctuations [9] - The company has revised its full-year gross margin outlook upward by 160 basis points, indicating strong pricing power and brand resilience [11] Marketing Strategy and International Expansion - Under Armour's marketing strategy has evolved to focus on grassroots programs and influencer collaborations, with a $500-million marketing budget aimed at engaging young athletes [12] - The company is refining its international strategies, particularly in EMEA and Asia-Pacific, to drive long-term growth and stabilize its market presence [13] Financial Outlook - Under Armour has adjusted its fiscal 2025 guidance, projecting a low-single-digit percentage decrease in adjusted selling, general and administrative expenses and an increase in adjusted operating income to between $185 million and $195 million [14][15] - The adjusted earnings per share forecast has been raised to a range of 28-30 cents, reflecting the company's commitment to cost discipline and operational efficiency [15] Analyst Sentiment - Analysts have positively revised their earnings estimates for Under Armour, with the consensus estimate for the current fiscal year increased to 30 cents per share [16]

Core Insights - Under Armour, Inc. reported third-quarter fiscal 2025 results with revenues and earnings exceeding the Zacks Consensus Estimate, although both metrics decreased year over year [1][3] - The company has refined its brand focus and updated its product strategy, which has positively impacted performance and led to an improved fiscal 2025 outlook [1] Financial Performance - Adjusted earnings were 8 cents per share, surpassing the Zacks Consensus Estimate of 3 cents, but down from 19 cents in the prior year [3] - Net revenues reached $1,401 million, exceeding the consensus estimate of $1,338 million, but decreased by 5.7% year over year [3] - Wholesale revenues fell 1% to $704.8 million, while direct-to-consumer revenues declined 9.1% to $672.9 million [4] Revenue Breakdown - Apparel revenues decreased 5% to $966.1 million, exceeding the consensus estimate of $909.2 million [5] - Footwear revenues dropped 9% to $301.2 million, below the consensus estimate of $303.6 million [5] - Revenues from Accessories rose 5.7% to $110.4 million, outperforming the consensus estimate of $98 million [5] Geographic Performance - North America revenues declined 7.8% to $843.6 million, exceeding the Zacks Consensus Estimate of $790.7 million [6] - International revenues decreased 1.4% to $558 million, with EMEA revenues increasing 4.9% to $297.9 million [7][6] Margin and Expenses - Gross profit was $665.2 million, down 0.8% year over year, but gross margin expanded 240 basis points to 47.5% [8] - Adjusted selling, general, and administrative expenses rose 5% to $605.5 million, primarily due to higher marketing expenses [9] Financial Position - The company ended the quarter with cash and cash equivalents of $726.9 million and long-term debt of $595.2 million [10] - Under Armour repurchased $25 million worth of its class C common stock, retiring 2.8 million shares [11] Fiscal 2025 Outlook - Revenues are expected to decline 10%, an improvement from the previous forecast of a low-double-digit percentage decline [14] - Adjusted operating income is projected between $185 million and $195 million, an increase from the earlier estimate [17] - Loss per share is expected between 48 cents and 50 cents, with adjusted earnings per share forecasted between 28 cents and 30 cents [18]

Revenue Performance - Total net revenues decreased by 5.7% compared to the same period last year[175] - Wholesale revenue decreased by 1.0%, while direct-to-consumer revenue decreased by 9.1%[175] - Apparel revenue decreased by 5.0%, footwear revenue decreased by 9.0%, and accessories revenue increased by 5.7%[175] - Net revenues decreased by $85.0 million, or 5.7%, to $1,401.0 million for the three months ended December 31, 2024, compared to $1,486.0 million for the same period in 2023[183] - For the nine months ended December 31, 2024, net revenues decreased by $385.9 million, or 8.8%, to $3,983.7 million compared to $4,369.7 million in the same period in 2023[183] - Total net revenues decreased by $385.96 million, or 8.8%, to $3,983.73 million for the nine months ended December 31, 2024, compared to $4,369.68 million in 2023[217] - The decrease in net sales was attributed to both wholesale and direct-to-consumer channels[185] - North America net revenue decreased by 7.8%, while EMEA increased by 4.9%[175] - North America net revenues decreased by $71.7 million, or 7.8%, to $843.6 million, attributed to declines in both direct-to-consumer and licensing revenues[215] - EMEA region net revenues increased by $13.8 million, or 4.9%, to $297.9 million, supported by growth in both wholesale and direct-to-consumer channels[215] - Asia-Pacific net revenues decreased by $55.71 million, or 8.6%, to $590.61 million, impacted by lower sales in both wholesale and direct-to-consumer channels[220] Financial Metrics - Gross margin increased by 240 basis points to 47.5%[175] - Gross profit decreased by $5.5 million to $665.2 million during the three months ended December 31, 2024, with a gross margin increase to 47.5% from 45.1%[190] - Gross profit for the nine months ended December 31, 2024, decreased by $106.7 million to $1,924.0 million, with a gross margin increase to 48.3% from 46.5%[191] - Total operating income decreased by $57.9 million, or 81.1%, to $13.5 million for the three months ended December 31, 2024, compared to the same period in 2023[216] - Other expense, net increased by $50.5 million to $2.6 million during the three months ended December 31, 2024, primarily due to an earn-out related to the sale of MyFitnessPal[206] - Income tax expense decreased by $2.3 million to $6.3 million for the three months ended December 31, 2024, with an effective tax rate of 83.3% compared to 7.2% in the prior year[208] Expenses and Costs - Selling, general and administrative expenses increased by 6.4%[175] - Selling, general and administrative expenses increased by $38.5 million, or 6.4%, to $637.7 million for the three months ended December 31, 2024, as a percentage of net revenues increased to 45.5% from 40.3%[194][197] - Selling, general and administrative expenses increased by $197.5 million, or 11.0%, during the nine months ended December 31, 2024, with a percentage of net revenues rising to 50.1% from 41.1%[197] - License revenues decreased by $5.2 million, or 17.8%, to $23.9 million during the three months ended December 31, 2024, primarily due to lower revenues from licensing partners in North America[186] - Marketing costs decreased by $31.1 million, or 7.1%, but as a percentage of net revenues, they increased to 10.2% from 10.0%[202] - Other costs increased by $228.6 million, or 16.8%, primarily due to higher litigation expenses and an impairment charge of $28.4 million[202] - Interest expense, net increased by $3.2 million to $3.4 million during the three months ended December 31, 2024, primarily due to a decrease in interest income[203] Restructuring and Future Plans - The 2025 restructuring plan was approved with an estimated total cost of $140 million to $160 million[176] - Total costs recorded in restructuring charges for the three months ended December 31, 2024, amounted to $17.764 million[176] - Up to $75 million in cash-related charges are anticipated as part of the restructuring plan, including $30 million in employee severance costs[179] - Restructuring charges increased by $13.9 million, or 100.0%, to $13.9 million for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to employee-related, facility-related, and other restructuring charges[199] - The company expects trends in gross margin improvements to continue through the remainder of Fiscal 2025, albeit to a lesser extent[192] Cash Flow and Capital Expenditures - Net cash provided by operating activities decreased by $334.0 million to $142.9 million for the nine months ended December 31, 2024, compared to $476.9 million in 2023[233] - Cash flows used in investing activities increased by $27.7 million to $(99.2) million, primarily due to higher capital expenditures and acquisitions[235] - Total capital expenditures for the nine months ended December 31, 2024, were $139.9 million, representing approximately 4% of net revenues, an increase of $23.3 million from $116.5 million in 2023[236] - Cash flows used in financing activities increased by $79.5 million to $(154.5) million, including $80.9 million for repaying Convertible Senior Notes and $65.0 million for share repurchases[237] Liquidity and Financing - As of December 31, 2024, the company had approximately $726.9 million in cash and cash equivalents, sufficient to meet liquidity needs for at least the next twelve months[224] - The company authorized a share repurchase program of up to $500 million, with $65 million already repurchased as of December 31, 2024[229][232] - The company plans to continue reinvesting its non-U.S. subsidiaries' cumulative undistributed earnings of $1.5 billion to fund international growth and operations[226] - The company has a revolving credit facility of $1.1 billion, with no amounts outstanding as of December 31, 2024[238] - As of December 31, 2024, $45.9 million of letters of credit were outstanding under the amended credit agreement[240] - The company repaid $80.9 million of Convertible Senior Notes upon maturity on June 1, 2024, using cash on hand[246] - The company issued $600.0 million of 3.25% senior unsecured notes due June 15, 2026, with interest payable semi-annually[247] - The amended credit agreement requires maintaining a consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.0[243] - The company incurred capital expenditures of $88.5 million related to the construction of its new global headquarters, designed with sustainability features[236]