uploads/2017/11/6-2.jpg

Under Armour Stock Touches a 5-Year Low with Lower Guidance

By

Updated

Market reaction to Under Armour’s 3Q17 results

Glum guidance along with a top-line miss may have cost Under Armour (UAA) almost a quarter of its stock value. The company’s stock price fell 23.7% after it released its 3Q17 results, touching a five-year low of $12.48 and closing at $12.52 on October 31. The stock fell another 3.7% the next trading day.

The catalyst for this fall was likely the company’s mixed 3Q17 results. Whereas it beat Wall Street’s earnings expectation by $0.03, it missed the sales forecast by $80 million. The company halved its fiscal 2017 guidance during the earnings call.

Article continues below advertisement

Under Armour’s performance this year

Under Armour is currently trading at $12.05, sitting at YTD (year-to-date) loss of 58.5%. It is trading 178% below its 52-week high price. In comparison, competitors Skechers (SKX), Nike (NKE), and Columbia Sportswear (COLM) are sitting at YTD gains of 32.4%, 8.3%, and 6.7%, respectively.

Speciality athletic retailers have also struggled. Foot Locker (FL) and Dick’s Sporting Goods (DKS) have fallen 57% and 54% YTD, respectively. UAA has underperformed the broader S&P 500 Apparel and Accessories Index, which has risen 8.1%, as well as the S&P 500 (SPX), which has risen 15.2%.

Discussing valuation

Despite its dismal financial and stock market performance, Under Armour continues to trade at a premium to peers. It is currently valued at a one-year forward PE (price-to-earnings) ratio of 45.4x. In comparison, Nike, LULU, and COLM are trading at 23x, 24.7x, and 21.4x, respectively.

Historically, UAA is definitely cheaper. The company has a three-year average PE ratio of 63x. Investors seeking exposure to UAA could consider the First Trust Mid Cap Value AlphaDEX ETF (FNK), which invests 0.13% of its portfolio in the company.

Advertisement

More From Market Realist