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Why Under Armour Stock Is Tumbling

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Why Under Armour Stock Is Tumbling

Under Armour Inc's (NYSE: UA) earnings report sent the stock tumbling more than 12 percent despite the company reporting a top-and-bottom-line beat and reaffirming its prior full year 2016 sales and operating income guidance.

Lindsay Drucker Mann of Goldman Sachs pointed out  several concerning financial metrics and trends, which prompted the heavy selling.

Related Link: Under Armour's Q3 Report Underwhelms Investors

Here are the analyst's key points:

  • A 29 percent growth in direct-to-consumer sales was consistent with last quarter's 28 percent gain, but on a modestly easier year-over-year comparison.
  • The 19 percent growth in wholesale revenue marks a material slowing from last quarter's 27 percent gain.
  • North American sales rose just 16 percent in the quarter compared to a 21.5 percent growth last quarter.
  • International sales rose 80 percent (excluding foreign exchange) and accelerated from last quarter's 72 percent growth.
  • Sales of footwear slowed to 42 percent growth from 58 percent last quarter and the analyst was "surprised" as she expecting at least a 50 percent growth.
  • Apparel sales rose 18 percent, which exceeded the analyst's 13 percent expectation.

Drucker Mann also pointed out that Under Armour's 130 basis point year-over-year decline in margins was much weaker than expected and came in 100 basis points below consensus estimates and erased $0.02 per share in the company's reported earnings.

Bottom line, the company will update investors on its long-term growth initiatives during its conference call. However, the analyst's "conversations into earnings indicated many have been looking for UA to reduce targets."

Latest Ratings for UA

DateFirmActionFromTo
May 2019UpgradesNeutralOverweight
Feb 2018MaintainsNeutralNeutral
Jan 2017Initiates Coverage OnBuy

View More Analyst Ratings for UA
View the Latest Analyst Ratings

Posted-In: apparel stocks Lindsay Drucker Mann under armour Under Armour EarningsAnalyst Color Earnings News Analyst Ratings Best of Benzinga

 

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