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Under Armour Inc A UAA

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No-Moat Under Armour Closes Difficult 2020 With Unexpected Profit in Q4; Shares Overvalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

No-moat Under Armour’s results for the final quarter of 2020 were better than expected as direct-to-consumer revenue rose 11%, aided by a 25% jump in e-commerce and strong consumer demand for athletic apparel during the pandemic. Still, wholesale sales dropped 12%, reflecting the ongoing effects of the crisis on many traditional retailers. Under Armour recorded an adjusted EPS loss of $0.26 in 2020, but it guided to 2021 EPS of $0.12-$0.14 on about $4.8 billion in revenue, in line with our prior estimates. We expect to increase our $12.10 fair value estimate by a high-single-digit percentage but view the shares, up about 8% midday on the report, as overvalued.

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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.

1020 Hull Street
Baltimore, MD, 21230
T +1 410 454-6428
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 16,600