Under Armour Earnings: Slight Outperformance Offset by Dimmer Near-Term Outlook; Shares Undervalued

Under Armour’s sales and earnings came in slightly better than expected in fiscal 2024’s second quarter, but it trimmed its second-half guidance on weakness in the North America wholesale channel, an issue that we believe is affecting many peers. As the firm did not revise its outlook for fiscal 2024 EPS of $0.47-$0.51, we do not expect to make any material change to our $15.50 fair value estimate and view shares as very undervalued. Although we rate the company as no-moat, we believe it has strengths, including its position in the attractive activewear space and a solid balance sheet with just $20 million in net debt at the end of September.