Pre-Earnings Analysis: What to Expect from Under Armour in 1Q16

Warming up for 1Q16 earnings

Sports gear giant Under Armour (UA) is slated to declare its 1Q16 results on April 21, 2016. The quarter ended on March 31, 2016.

Launched in 1996, the Baltimore-based company initially produced performance apparel (XLY) (FXD). Since then, Under Armour’s product base has expanded to include footwear and equipment. The company’s Connected Fitness business consists of several platforms such as MapMyFitness, Under Armour Record, Endomondo, and MyFitnessPal. Under Armour hosts the world’s largest digital fitness community, estimated at over 150 million users.

Pre-Earnings Analysis: What to Expect from Under Armour in 1Q16

Under Armour’s strong historical sales record

Under Armour (UA) earned almost $4 billion in net revenue in 2015, a 28.5% growth rate over the previous year. In the first quarter of 2015, the company earned $805 million in revenue.

Projections for the upcoming quarterly results are also upbeat. Revenue is expected to come in at $1.04 billion, according to the Wall Street analyst consensus. This would imply a growth rate of 28.8% over 1Q15. Under Armour’s results have beaten the market’s consensus on quarterly sales for 28 straight quarters.

Under Armour’s rivals in the activewear industry—Nike (NKE), Adidas (ADDYY), and Lululemon Athletica (LULU)—also posted relatively upbeat results in their last quarters. Nike grew its sales by 7.7% to just over $8 billion in the quarter ended February 29, 2016.

Lululemon posted revenue growth of 16.8%, with revenue coming in at $704 million in the quarter ending February 1. Adidas’ net sales came in at 4.2 billion euros in calendar 4Q15, up ~15% YoY.

You can read about Nike’s and LULU’s performance in our earnings series Nike’s Fiscal 3Q16 Results Show Earnings Momentum and Lululemon Stock Rose 10.7% on Upbeat Fiscal 4Q16: What’s Next?

S&P 500 components Nike and Under Armour together make up 0.48% of the portfolio holdings in the SPDR S&P 500 ETF (SPY).

Before we jump in to analyze UA’s earnings drivers, we’ll quickly discuss the company’s performance in 2015.