Under Armour Earnings: Sales Growth Remains Elusive as Sportswear Demand Slows; Shares Undervalued

Under Armour's fiscal 2024 third-quarter profitability surpassed our forecast despite underwhelming sales, especially in the North America wholesale channel. While short-term sales improvement is unlikely due to its long product development cycle and industrywide weakness in sportswear, Under Armour's guidance for fiscal 2024 adjusted EPS of $0.50-$0.52 aligns with our forecast. Thus, we do not expect to make any material change to our $15.50 fair value estimate and view its shares as undervalued. Although we rate Under Armour as a no-moat company, it has a strong balance sheet, competes in an attractive space, and has potential for growth in casual activewear.