24/7 Wall St. » Under Armour

Under Armour: GARP or Value Trap? (UA)

247wallst — Thu, 31 Jan 2008 09:05:31 +0000

Under Armour, Inc. (NYSE: UA) posted its earnings this morning, and some might be breathing a sigh of relief that the stock is only down marginally. The sporting apparel maker posted Q4-2007 EPS of $0.34 per share on a 29% rise in revenues to $174.8 million. First Call had estimates pegged at $0.32 EPS on revenues of $173.5 million.

We had already been warned that the company was going to see a ramping up of its ad spending for the first half, and Wall Street understood that this meant a lower bottom line. Under Armour’s guidance for fiscal 2008 is light as it sees revenues of $765 to $775 million. First Call has estimates at $787.87. The company is maintaining the stance that its diluted earnings per share will be in a range of $0.03 to $0.05 for the first half of 2008.

Shares had actually indicated slightly higher in pre-market trading, but now shares are down almost 3% at $36.50. Its 52-week trading range is $25.39 to $73.40, although this only spent two or three days over the last two weeks down under $30.00.

What is interesting is how this has fallen so far from grace after a monumental 2006 rise. If the company would just meet prior 2008 targets, it would now have a forward P/E ratio of just under 30. The problem is that it isn’t growing as fast as before and it is no secret that all high growth companies either reach the end of the exponential growth or at least mature.

If you are a growth investor, the GARP (growth at reasonable price) is there. But the best growth is behind it and all the momentum is a mere memory. Based on its multiples, its recent performance, its current earnings performance, and more, this also looks more like a value trap than it does a value stock. The good news on the flip-side of the coin is that it at least looks like most of the worst has been seen. We’d also note that if the company loses too much value it would make an attractive brand target for another apparel conglomerate that wants another solid core brand under its roof.

Jon C. Ogg
January 31, 2008

Cramer Thinks lululemon athletica Is The Next Under Armour (UA, LULU)

247wallst — Fri, 03 Aug 2007 17:28:31 +0000

Cramer’s Next Under Armour: Lulelemon Athletica (NASDAQ:LULU). It came public at $18.00 and went up to $31.00 during a crummy market. This one does similar things to Under Armour, but they are more into yoga and new age types of clothing. He thinks their sales will grow huge and operating income will grow exponentially. It has its own stores and will be opening more stores this year and then even more stores in 2008. If this matched Under Armour’s growth it would double sales and earnings it can grow considerable. He does think this is risky and will be closely watched by the street and it is very speculative. He even thinks you should wait for an entry point next week. Shares closed down 6% at $31.00 today, but then rose 4% in after-hours after Cramer talked it up.

Can you imagine a person with a speech impediment trying to say this company’s name?

Jon C. Ogg
August 3, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Cramer Calls Under Armour & Crocs (UA, CROX, NKE)

247wallst — Tue, 31 Jul 2007 12:46:02 +0000

On today’s TheStreet.com video, Jim Cramer again pushed Under Armour (NYSE:UA). The stock is up big after earnings from this morning. He noted how he was critical at its last earnings report, but this quarter they overdelivered big on an under-promise. It is one to own for back to school and for Christmas and isn’t one you can really worry about the actual stock price. Cramer even noted, "Under Armour is the next Nike (NYSE:NKE)!". He thinke their clothing is now a required outfit for sport teams. Under Armour shares are putting in new all-time highs up over 15% on the day. For unbridled growth Cramer said you can go listen to the Crocs (NASDAQ:CROX) call. It too is putting in another 52-week high today with its shares up over the $60.00 handle. That’s up 300% over the last year. When you look at the last earnings report, it’s just too hard to not give the company credit.

Jon C. Ogg
July 31, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.