Under Armour Inc (UA) Stock Is a Bargain-Bin Buy for Growth

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Athletic apparel company Under Armour Inc (NYSE:UA) is due to report third-quarter earnings on Tuesday after what can only be described as a turbulent year. UA has been working to transform itself by incorporating fitness tracking hardware and software into its product line. While this strategy has been applauded by investors who see the wearables space shifting more toward health and fitness, UA stock has seen a marked decline this year, with shares down more than 17% from last October.

Under Armour UA stock

Tuesday’s earnings release may give investors some insight into how the firm plans to overcome the major blow dealt by Sport’s Authority’s bankruptcy. However, many traders are looking at UA’s lower stock price as an opportunity to invest in a company that has a great deal of growth potential.

Much of UA stock’s decline was due to worries about Sports Authority’s decision to file for bankruptcy back in March. The sporting goods store was Under Armour’s largest seller and UA has admitted that the ordeal has taken a financial toll on the company’s bottom line.

While Sports Authority’s closure hurt UA’s earnings this year, it appears to be a one-off and is unlikely to weigh on the company long-term. Under Armour has proven that its products are in high demand by improving its direct sales from quarter to quarter, and the athletic retail business appears to be picking up speed with Sports Authority competitors like Dicks Sporting Goods Inc (NYSE:DKS) continuing to thrive.

What to Watch for in the UA Earnings Report

Growth will be the name of the game on Tuesday when investors see Under Armour’s third-quarter results. Specifically, international growth will of particular interest to UA stock investors. During the second quarter, Under Armour reported a 73% increase in international sales and following the Olympics, where several top U.S. athletes sported the firm’s gear, many are expecting to see an impressive bump in overseas figures.

The financial impact of Sports Authority’s bankruptcy is likely to keep the company’s overall income from wowing, though, so UA stock investors should be prepared for that. This could keep reactions to Under Armour’s results muted and offer investors further chance to buy-in.

Another focal point for Under Armour’s earnings release will be the firm’s latest partnerships. Over the summer, UA announced plans to partner with department store chain Kohl’s Corporation (NYSE:KSS). Under the new deal, Kohls will carry Under Armour clothing, footwear and accessories and UA will test its HealthBox fitness tracker at Kohls stores as well. UA stock investors will be listening to the earnings call for more details on whether the Kohls partnership has helped the company connect with more female shoppers as many were anticipating.

Not only that, but traders will be eager to hear whether reports that UA will be outfitting Major League Baseball players in 2020 are true. While sources close to the deal have confirmed its existence, details are scarce, so Tuesday’s earnings call may offer more clarity.

The Key to UA Stock’s Future?

Under Armour has recently made a major push into the tech space with a complete line of connected fitness gear as part of its Health Box wearable device. The firm’s newest gadget is a set of headphones that is capable of tracking a user’s heart rate and delivering updates during their workout.

UA’s dedication to offering comprehensive fitness tracking technology speaks volumes about the firm’s future plans. As more people turn to fitness tracking software and wearable devices, Under Armour is looking to close the gap between athletic apparel and tech gear.

The firm has spent more than $700 million in order to beef up its digital and hardware offerings, so it’s important that the company’s gear is well received. Historically Under Armour hasn’t broken out sales of connected fitness devices, but it is likely to address this space and give traders an update as to how its tech products are faring.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.

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Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.


Article printed from InvestorPlace Media, https://investorplace.com/2016/10/under-armour-inc-ua-stock-bargain-bin-growth/.

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