Investors Await Under Armour's Q3 Results: Can It Beat Again?

Athletic apparel and sportwear retailer Under Armour Inc UA is scheduled to release its third quarter earnings before the market open on Tuesday.

Analysts, on average, expect the company to report earnings per share of $0.25, up roughly 8.7 percent from $0.23 in the year-ago period. Revenues are expected to improve 20.90 percent to $1.46 billion.

The company has a habit of beating estimates. In the previous four quarters, Under Armour edged past estimates in two quarters, reported a strong upside in one and was in line in the other quarter.

Analysts estimates for the third quarter have not moved much since the start of the quarter.

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Barclays said it expects revenue growth of 21.9 percent to $1.47 billion, premising its above-consensus view on a multitude of new products, twice as many running shoes priced above $100 and new iterations from the Steph Curry franchise. Higher recaptured revenues from The Sports Authority liquidation and gaining of significant distribution within existing partners may also help.

Long-Term Positives

In a note last week, Baird views the licensing rights Under Armour along with Fanatics reportedly secured to become Major League Basketball's next uniform provider, beginning in 2020, as a step to elevate the brand in a significant way. However, profit-wise the firm doesn't see much benefit, as costs associated with license fees and other investment would offset the revenue/brand benefits.

Future?

Longer term, Barclays believes Under Armor can meet and potentially exceed its original $7.5 billion revenue target by 2018 despite the near-term The Sports Authority hiccup.

For the fourth quarter, analysts expect earnings of $0.28 per share, up from $0.24 per share in the year-ago period. Revenue growth is expected to accelerate to 22.30 percent to $1.43 billion.

Under Armour is expected to report 2016 earnings per share of $0.59 on revenues of $4.94 billion. This represents a 11.32 percent bottom line expansion and a 24.50 percent top line growth.

The stock was down 3.61 percent in the third quarter. This compares to a 4.62 percent drop for rival Nike NKE. In the same period, the S&P 500 Index has gained 3.3 percent.