Will Under Armour Deliver Improved Results in 2019?



Company’s revenue expectations

On May 17, JPMorgan Chase upgraded its rating for Under Armour (UAA) stock to an “overweight” from a “neutral,” reflecting its confidence in the company’s growth prospects. Under Armour’s revenue rose 1.6% in the first quarter of 2019. The company expects revenue growth in the 3%–4% range in 2019.

Under Armour expects its revenue from the North American region to remain flat in 2019 compared to 2018, while its revenue from international operations is expected to grow in the low double digits. Under Armour’s North American business has been suffering due to its lack of compelling innovations and intense competition from its peers Nike (NKE), Adidas, and Lululemon (LULU). The company is taking various measures to improve its business, including reducing its sales to the off-price channel and selling at premium price points to protect its brand positioning.

The company’s international business is its key growth driver, but its guidance for 2019 reflects a slowdown compared to 2018. Under Armour’s international revenue rose 23% to $1.3 billion in 2018.

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Under Armour’s adjusted EPS improved to $0.05 in the first quarter of 2019 compared to its break-even earnings in the first quarter of 2018. Following the improvement in its first-quarter earnings, Under Armour raised its 2019 EPS outlook to $0.33–$0.34 compared to the previous forecast of $0.31–$0.33.

Analysts’ expectations

Analysts expect Under Armour’s revenue to increase 3.5% to $5.4 billion in 2019. Analysts expect Under Armour’s adjusted EPS to grow 29.6% to $0.35.

Under Armour aims to improve its performance by focusing on growth opportunities in international markets, the direct-to-consumer channel, and the footwear and women’s categories.


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