Underneath Armour (UAA) began with an easy promise — make athletes higher. What started as efficiency compression gear grew into a worldwide model spanning attire, footwear, and equipment by fixing on a regular basis issues athletes really confronted.
Its omni-channel attain, premium positioning, and increasing direct-to-consumer playbook have stored Underneath Armour related, whereas momentum in worldwide areas and rising pull with youthful customers sign a model quietly regaining its edge. A clear steadiness sheet provides persistence to the turnaround.
UAA shares have tumbled by double digits over the previous 12 months, pushing sentiment into skeptical territory even because the model’s fundamentals stabilize. Nevertheless, one UBS analyst argues this disconnect has gone too far. Analyst Jay Sole says traders materially undervalue Underneath Armour’s model, which ranks alongside business heavyweights in consciousness, buy intent, and client enchantment in accordance with UBS’s World Sportswear Survey.
Sole expects innovation to reaccelerate progress, forecasting a 25% five-year EPS compound annual progress price (CAGR). The analyst calls the valuation hole with friends unjustifiably extensive, establishing a compelling case for 2026.
Based in 1996, Underneath Armour sprinted from a small concept to a worldwide sportswear power, crafting gear constructed to make athletes higher. From compression tees to loose-fit hoodies, trainers to cleats, and gloves to backpacks, it blends innovation with fashion. Past attire, the agency performs in footwear, equipment, and digital ventures, at present boasting a $2.26 billion market capitalization.
UAA inventory has spent a lot of the previous 12 months below heavy strain, sliding 36% as persistence wore skinny. However the tone has shifted since mid-December. Freshly constructive calls from brokerages like Guggenheim have helped spark a rebound, lifting shares almost 20% over the previous month and 14% in simply 5 days.
That surge has pushed the 14-day RSI above 70 not too long ago and into overbought territory. That hints that the rally could pause or cool close to time period, whilst momentum clearly turns constructive.
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Underneath Armour’s valuation displays warning, not collapse. Buying and selling at simply 0.41 occasions ahead gross sales, UAA inventory sits beneath sector friends and its personal historic median, quietly providing room for upside if execution continues to agency up.
Underneath Armour’s second-quarter earnings replace, launched on Nov. 6, was like a progress report from an organization intent on incomes its comeback. The quarter got here in forward of administration’s prior outlook, and for a model lengthy outlined by North America, crucial takeaway was that early indicators of momentum are starting to reappear at dwelling. CEO Kevin Plank mentioned the technique, working mannequin, and go-to-market strategy are actually firmly in place, with sharper merchandise and clearer storytelling restoring perception amongst customers and wholesale companions alike.
The numbers nonetheless present strain, but additionally self-discipline. Income fell 5% year-over-year (YOY) to $1.3 billion, but exceeded expectations. North America declined 8% YOY to $792 million, whereas worldwide income grew 2% to $551 million. Inside that blend, EMEA stood out with 12% progress, and Latin America rose 15%, offsetting a 14% decline in Asia-Pacific. Wholesale income slipped 6% to $775 million, whereas direct-to-consumer (DTC) declined 2% to $538 million. Owned shops have been regular, however e-commerce fell 8% and accounted for 28% of DTC gross sales.
By class, attire proved resilient, down simply 1% to $936 million. In the meantime, footwear dropped 16% to $264 million and equipment declined 3% to $113 million.
Gross margin fell 250 foundation factors to 47.3%, reflecting tariff-driven supply-chain prices and an unfavorable channel and regional combine, partially offset by pricing and international alternate advantages. Adjusted working earnings reached $53 million, and adjusted EPS of $0.04 topped Wall Road forecasts.
The steadiness sheet tells a parallel story of cleanup and management. Money totaled $396 million. Underneath Armour used proceeds from its 2030 Senior Notes, revolver borrowings, and money to defease $600 million of 2026 notes, putting funds in a restricted account to cowl remaining obligations. It additionally repurchased $25 million of Class C shares in the course of the quarter.
Wanting forward, fiscal 2026 stays a reset 12 months. Income is anticipated to fall 4% to five%, with strain in North America and Asia-Pacific offset by progress in EMEA. Gross margin is projected to say no 190 to 210 foundation factors, whereas adjusted working earnings is forecast at $90 million to $105 million and adjusted EPS at $0.03 to $0.05.
Analysts monitoring the corporate predict EPS to be $0.04 for fiscal 2026, down 87% YOY, earlier than surging by 400% yearly to $0.20 in fiscal 2027.
UBS frames Underneath Armour as a turnaround the place notion lags actuality. Analyst Jay Sole reiterated a “Purchase” score with an $8 value goal, pointing to 47% potential upside and a projected 25% five-year EPS CAGR that he believes will shock traders.
The core of the thesis is model energy. UBS’s World Sportswear Survey locations Underneath Armour among the many world’s most acknowledged and appreciated athletic labels, in the identical tier as names like lululemon (LULU) and adidas (ADDYY). But these friends command a median market worth close to $19 billion, versus roughly $2.26 billion for Underneath Armour — a spot Sole says is just too extensive. Robust unaided model consciousness and buy intent underscore that disconnect. The analyst expects renewed product innovation to enhance client notion, help full-price promoting, raise North America progress, and drive income towards $5.6 billion by 2030.
UAA inventory has a consensus “Maintain” score general. Out of 25 analysts overlaying the tech inventory, three suggest a “Robust Purchase,” 20 analysts keep cautious with a “Maintain” score, and two analysts have a “Robust Promote” score.
The typical analyst value goal for UAA is $5.61, indicating potential upside of round 3% from right here. Nevertheless, the Road-high goal value of $9 means that the inventory might rally as a lot as 65%.
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On the date of publication, Sristi Suman Jayaswal didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All info and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
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