While Under Armour, Inc. (NYSE:UA) delivered some decent numbers in its earnings report, and UA stock rose 16%, I find that huge gain to be overdone. I think this is going to be a relatively short-lived turnaround for UA and, over time, investors will find UA moving back down.

What’s Right

Here’s the good news. UA stock revenue was up 5%, driven by an 11% increase in direct-to-consumer sales. That’s a good thing because margins on D2C sales are usually higher. D2C revenue for UA stock are now 42% of total revenue.

Higher revenue was also driven by excellent international gains. UA stock revenue internationally rose a whopping 47%, lead by 45% increase in EMEA and 56% in Asia-Pacific. Keep this in mind. I’ll return to it in a moment.

Wholesale revenues fell 1% to $733 million, which represents half of UA stock revenues. It’s not a good thing to see half of your business revenues generated by a division that had a sales decline.

Footwear revenue was up 9% to $246 million, which is a good thing, as this is about 18% of total revenue.

What’s Wrong

Now for the bad news. Gross margins fell 150 basis points to 43.2%. SG&A increased 40%, although some of this was due to putting more resources into the D2C, footwear, and international business, so I’m fine with that. However, there was an operating loss of $38 million, and net loss of a million bucks. Inventories soared 26%. The portion that rose due to fast growth internationally is fine.

North American inventory, however, increased by a “mid-teen percentage,” according to the company. That’s not good. You want to see inventories only rise as fast as revenues grow. That means stuff is sitting on the shelves domestically.

I found several other things in the release that I don’t like.

First, where are the comparable store sales numbers? I get that D2C is increasing, but that’s no excuse to not even mention comps. No analysts even asked about this metric on the conference call. That’s a bad sign.

Second, UA said it would restructure for 2017. That sets a certain expectation. Then it said today, “Well, actually, we are going to keep restructuring next year also and it’s going to cost another $110-$130 million, but we’ll save $75 million each year thereafter.”

I’m not saying that this was known ahead of time, but it says to me that management at Under Armour stock isn’t as in touch with its own business as it perhaps should be.

Bottom Line on UA Stock

2018 is not expected to be a terribly good year. Revenues should grow in the low single digits, driven by high growth internationally, but a single-digit North American decline. Gross margin is expected to increase by 50bps, with operating income ex-restructuring to be between $130-160 million, with an adjusted diluted EPS from 14-19 cents per share.

I mentioned international sales earlier. Yes, they are growing quickly. Yes, that’s a good thing. Yet, it is also expected when any chain expands abroad. The problem is that, just as we see domestically, international sales growth will slow down and possibly decline. In fact, it probably will decline because there is nothing about UA products that likely will make their reception any greater in Europe than in the US. Just like here, UA will have to deal with competition from Nike, Inc. (NYSE:NKE) and other retailers.

So, I would take this big jump in Under Armour stock price with a grain of salt. This international pop is just a pop and I don’t expect it to last.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.