FBR Capital Markets: 'Nike Continue To Impress, But We Like Under Armour Instead'

Nike Inc NKE impressed the Street with its earnings beat on Thursday. However, according to Susan Anderson from FBR Capital Markets at current valuations Under Armour Inc UA is a better pick than Nike. She was on CNBC Friday to explain why.

Growing The Market

"They definitely continue to impress," Anderson began. "The beat was really driven once again by top-line and margins. What they are doing is they just continue to drive innovation, which is driving newness. They are also growing the market and this is allowing them to raise prices and in turn drive the top-line and margins."

Like Under Armour Instead

On the stock's current valuation, Anderson said, "We do have a Market Perform rating on Nike. I do think a lot of this is priced into the stock, it's trading about 23 times forward year earnings which is above its 10-year average, which is about the high-teens. So, we like Under Armour instead which is more [expensive] trades at 59 times, but you are also getting what we see as at least 5 years if not more of high 20 - low 30 percent top-line growth out of them."

Market Share

Anderson was asked when can Under Armour start eating into Nike's market share. She replied, "Right now, I think, both Nike and Under Armour can continue to perform very well, the market, the active wear market is growing still [...] so that helps out. And then you have other weaker players struggling such as Adidas continues to struggle, you also have Puma and Reebok. So, I think, Under Armour can continue to seek share from these weaker players for the time being."