Why Investors Don’t Care About Under Armour’s Q1 Loss
Although Under Armour posted its first loss since going public, it was barely a loss, and it seems that investors were more thrilled about the top-line growth.
[cnxvideo id=”550173″ placement=”ros”]Under Armour Inc. (NYSE: UAA) reported its first-quarter financial results before the markets opened on Thursday. Although the company posted its first loss since going public, it was barely a loss, and it seems that investors were more thrilled about the top-line growth that they missed last quarter.
The apparel giant said that it had a net loss of $0.01 per share and $1.1 billion in revenue, versus consensus estimates from Thomson Reuters that called for a net loss of $0.04 per share and revenue of $1.11 billion. The same period of last year reportedly had earnings per share (EPS) of $0.04 and $1.05 billion in revenue.
North American revenue dropped 1% as new distribution was more than offset by the absence of business lost to bankruptcies in 2016. International revenue, represented 20% of total revenue in the quarter and was up 52% (up 57% currency neutral).
The company reported its segment revenues for the quarter as follows:
- Apparel revenues increased 7.3% from last year to $715.4 million.
- Footwear revenue grew 2.0% year over year to $269.7 million.
- Accessories revenue jumped 11.8% to $89.1 million.
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In terms of outlook for the 2017 fiscal year, the company expects net revenues to grow 11% to 12%, as well as up to 12% to 13% on a currency-neutral basis. Under Armour also expects operating income to reach $320 million in this time.
The consensus estimates for the full year are $0.42 in EPS and $5.36 billion in revenue.
On the books, Under Armour cash and cash equivalents totaled $172.13 million at the end of the quarter, up from $157.0 million in the same period from last year.
Kevin Plank, Under Armour’s board chair and chief executive, commented:
Our first quarter results were in line with our expectations and we’re off to a solid start in 2017. By proactively managing our growth to deliver superior innovative product, continuing to strengthen our connection with consumers and increasing our focus on operational excellence – we have great confidence in our ability to drive toward our full year targets.
Shares of Under Armour closed up 0.9% at $19.71 on Wednesday, with a consensus analyst price target of $22.35 and a 52-week trading range of $18.40 to $45.99. Following the release of the earnings report, the stock was up nearly 10% at $21.58 in early trading indications Thursday.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
