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Under Armour Inc C UA

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

No-Moat Under Amour Outperformed Very Low Expectations in 2Q, but Recovery Appears Slow

David Swartz Equity Analyst

Analyst Note

| David Swartz |

No-moat Under Armour reported a large sales decline and loss in the second quarter of 2020 due to the pandemic, but its results were not as bad as feared and its direct-to-consumer efforts showed progress. However, shares dropped about 7% as the company suggested that second-half sales may be down 20%-25%, which is a larger decline than we had anticipated. Moreover, we have concerns that Under Armour’s relatively weak brand (as compared with rivals like wide-moat Nike and narrow-moat Adidas) is making its turnaround even more difficult. We do not expect to make any material change to our per share fair value estimate on Under Armour of $11.30 and view shares as slightly undervalued.

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Company Profile

Business Description

Under Armour develops, markets, and distributes athletic apparel, footwear, and accessories in North America and other territories. Consumers of its apparel include professional and amateur athletes, sponsored college and professional teams, and people with active lifestyles. The company sells merchandise through wholesale and direct-to-consumer channels, including e-commerce and nearly 400 total factory house and brand house stores. Under Armour also operates digital fitness apps with more than 200 million users. The Baltimore-based company was founded in 1996.

Contact
1020 Hull Street
Baltimore, MD, 21230
T +1 410 454-6428
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 16,400

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