After a miserable two year run, Under Armour (NYSE:UA) is back in the game. UA stock is scoring some points again. In fact, the stock has doubled since its late 2017 low.

It’s not hard to see why. Under Armour, which had fallen deep into loss-making territory last year, is putting up better numbers now. Its most recent earnings report topped expectations and the company affirmed that full-year 2018 is looking reasonably strong. And the company is putting up great numbers overseas. Is all that enough to overcome the company’s substantial weaknesses? Let’s look at the pros and cons for UA stock.

UA Stock Cons

Earnings Still Show Problems: Under Armour’s earnings beat expectations. More on that below. But they did so largely because the Street’s expectations were so low.

Take the EPS figure, for example: the company beat by five cents. Good, right? But they posted flat EPS — zero, zilch — showing an adjusted profit of just $1 million for the quarter. That’s hardly a great result, even though it was better than expected. The company also topped revenue estimates by a decent margin, but posted just 6% year-over-year growth despite that. And in the key North American market, sales actually fell slightly on the quarter.

Huge Inventory Build: There’s another more-specific problem we can see from their most recent quarter. Under Armour is piling up a huge amount of inventory. For the quarter, the company’s inventories surged 27% to $1.1 billion.

That’s a worrisome sign, given that revenues were up just 6%. This suggests that Under Armour is producing way more goods than stores and end consumers are actually ready to purchase. Particularly in fashion, large inventories often lead to big clearance discounts and product write-offs later. If you own UA stock, watch this figure closely going forward.

Investor Exuberance: Since November of last year, UA stock has now doubled. From a longer-term chart perspective, the recent recovery may not seem that impressive. The stock is still down almost 50% from the 2016 highs, after all.

However, let’s also remember that Under Armour was unprofitable over the past 12 months and literally only break-even this quarter. Going forward, it’s trading at a more than 60x PE on next year’s earnings, suggesting that the turnaround will continue rather gradually. On a price/sales ratio, the company is back over 2x, which is fairly pricey for an apparel play that isn’t meaningfully profitable.

UA Stock Pros

Diversifying Away From Basketball: Under Armour rode Steph Curry mania to great results a few years ago. But it’s risky to have so much of a company’s valuation and growth prospects coming from one star athlete. If anything goes wrong, sales declines can be swift. As we saw with UA stock in recent years, the company’s product line wasn’t diversified to withstand a strong counterattack from market leader Nike Inc (NYSE:NKE).

That’s what makes Under Armour’s recent shoe with Dwayne “The Rock” Johnson such a smart move. The Rock is an athlete sure, as a former wrestler, but he’s also an actor, director, and even potential presidential candidate. He exposes Under Armour to a lot of consumers that the usual basketball and football endorsements wouldn’t. The first batch of Rock shoes sold out in under an hour, showing that demand is potentially quite strong for this product line.

Earnings Beat Expectations: Earnings weren’t great this quarter. But they are an improvement over this quarter in 2017 and analysts’ expectations. Given that UA stock was down as much as 75% since early 2016, investor expectations were pretty low.

The company finally stopped losing money this quarter, and is now back to even operationally. Importantly, the company suggested that it will match its 2018 guidance, knocking a big hole in the bearish thesis that Under Armour would have to cut its outlook again.

While North American sales continue to disappoint, the company is doing well internationally. Under Armour posted 27% growth overseas on the quarter. It also is making solid progress with its direct-to-consumer sales channel, which put up 17% growth for the quarter. This facet of UA’s strategy in particular should do wonders for profit margins over time.

Crowded Short-Seller Trade: As I’m fond of saying, short sellers alone aren’t a great reason to own a stock. They tend to be pretty smart money, and betting against them comes with risk.

That said, in this case, if you’re already bullish on UA stock, the short sellers could add fuel to the fire. As of the most recent data, more than 17% of UA stock’s float has been sold short. Given the relatively modest average trading volume, that adds up to an 11 days to cover ratio, meaning it would take short sellers more than two weeks to get out of their positions if they tried to do so all at once. That represents a major upside catalyst, given that UA stock is strongly rallying and short sellers have to be getting nervous.

UA Stock Verdict

Under Armour appears to be turning the corner. But is it worth paying twice as much for UA stock as it sold for just last November?

You can make a case for the run going on a little longer. Short sellers are caught in a bad position without enough liquidity to take their losses gracefully. Given low expectations for the business, another beat next quarter should be possible. And the new line of Dwayne Johnson shoes seems promising.

For me, though, UA stock is simply too expensive given its lack of profitability, mounting inventory problems, and ongoing weakness in its domestic market.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.