Under Armour (UA) is soaring yet again after an impressive earnings report … no surprise there.
It seems like UA stock has mastered the art of wowing Wall Street, with another beat on both profits and revenue.
Specifically, Under Armour earnings showed profits of 7 cents a share, down a penny year-over-year but topping expectations of just 5 cents. Revenue soared 29% to $783.6 million to top UA stock forecasts of $761 million. And on top of all that, Under Armour raised full-year revenue guidance higher.
There’s so much to like about UA stock right now, especially when you dig into the details: Look at the 23% surge in Under Armour apparel sales, or the 40% jump in footwear sales thanks to endorsement deals with Stephen Curry of the NBA championship-winning Golden State Warriors. Look at big-picture Under Armour sales trends, including net revenue growth of more than 20% for 20 straight quarters.
And most importantly, look at UA stock itself — up 8% on these earnings, up more than 40% year-to-date and up 290% in the last three years.
What’s Next for UA Stock?
UA stock isn’t just attractive when you look at the past, either. There’s tons to be excited about in the future and reason to expect momentum to continue.
While profitability has admittedly lagged lately, that’s because Under Armour is investing heavily in new products, including two fitness technology companies, Endomondo and MyFitnessPal. The marriage of sports and technology — from Apple (AAPL) and its smartwatch to recent IPO Fitbit (FIT) and its wearables — will continue to evolve, and it’s a mega-trend Under Armour clearly wants to be in on.
There’s also a clear bid to become a global player like Nike (NKE) and Adidas (ADDYY). Under Armour stores are now open in the Middle East and Brazil, among other locations, and international revenue almost doubled year-over-year.
A forward price-to-earnings ratio of about 70 admittedly will give some investors pause, but remember that the dip in profits lately hasn’t been because of a lack of potential, but thanks to spending on the business itself. Furthermore, forecasts for UA stock always seem to be too conservative, and there’s nothing saying that a year from now Under Armour won’t be well ahead of whatever those forward estimates are.
If you want growth and you like momentum stocks, Under Armour has a lot to offer right now, even after an already impressive run.
It’s hard to tell when the sentiment will shift on a pick like UA stock, but that time does not seem close at hand based on the recent outperformance of this highflier.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.