Back in February, athletic apparel maker Under Armour Inc. (NYSE:UAA) made what many deemed to be a “comeback” after reporting quarterly results that bettered expectations. The company, whose products have fallen out of favor in the all-important North American market has been struggling against a slew of headwinds that have taken Under Armour stock down as low as $11.40 per share over the past year.

Now, with the firm’s financials apparently on the mend and CEO Kevin Plank CEO Kevin Plank vowing to keep his controversial comments to himself to keep his controversial comments to himself to allow consumers to focus on the brand, investors are starting to return to the stock.

However, although I’m willing to admit that UAA looks to be taking some necessary steps in the right direction, I don’t think Under Armour stock should be on your buy list right now- even if you believe in what the company is doing.

Under Armour Stock Is Expensive

The most important reason to refrain from buying Under Armour stock right now is the company’s valuation. UAA trades at 100 times its forward earnings, suggesting that there’s a great deal of growth potential there.

However, long gone are the days when Under Armour was producing revenue growth of 20% and I think it would be naive to believe that the company will be able to get back to that place any time soon.

The lofty valuation means there’s a lot of room for disappointment on bad news, so even if you think UAA is finally turning a corner, you might want to wait for another pullback for a better entry point. Any bad news, no matter how slight is likely to take the share price lower when there’s that much optimism regarding future growth.

Addressing North America

Another problem with optimism regarding Under Armour’s growth story is North America. At the moment, the company generates more than 80% of its revenue in its home market so it’s essential that the firm perform well among Americans. However, UAA isn’t faring well among its target market and North American sales declined by 3% in the most recent quarter.

It’s certainly encouraging that sales overseas improved, and it wouldn’t be far-fetched to say that the company will grow its presence in foreign markets considerably in the years to come- but that doesn’t mean that North America doesn’t matter. For one, as the largest contributor to overall revenue, North American sales are important from a financial standpoint.

From a strategic point of view, the North American sales slide is also concerning. Under Armour has begun to lose popularity in its number one market- what’s going on there? Is management going to fix it?

Those questions are essential to the company’s growth both inside the USA and outside, where the firm could fall victim to the same mistakes it made at home as it grows its business abroad.

Keeping Up With Trends

Part of the reason why Under Armour has fallen out of favor in the U.S. has been the fact that the firm hasn’t been keeping up with athletic wear trends. Unlike competitors Nike Inc. (NYSE:NKE) and Adidas (OTC:ADDYY), Under Armour doesn’t offer much in the way of athleisure.

UAA’s high-performance gear has been popular among athletes on the field, but otherwise the clothing has been left in the dust. That lack of buzz is hurting Under Armour, especially when it comes to footwear.

Footwear represents a huge market for growth for UAA and considering that athletic shoes are becoming more and more a part of mainstream fashion, it’s a good place for the firm to start improving its image. It appears the company is pinning most of its hopes on its new line of shoes, called Hovr, which boast a “zero gravity feel” are capable of tracking running statistics for wearers.

The shoe has performed well so far, although exact figures aren’t known yet. The launch of the Hovr line was Under Armour’s largest and most expensive marketing campaign to date according to the company’s senior vice president of global brand management- so its success will be crucial.

The Bottom Line

UAA’s new shoe line and some of its connected fitness plays are certainly worth watching, but the bottom line is that Under Armour stock is too expensive for what it is. I’m not totally convinced that the Hovr shoe line is the answer to the brand’s lack of buzz and if sales of the shoes come out even a little bit lackluster you can bet that the stock will tank.

If you’re a believer in the athletic company, I’d wait for bad news to pull the valuation lower.

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