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Under Armour Or Nike: Which One Will Outrun The Other?

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Under Armour Or Nike: Which One Will Outrun The Other?

Sportswear – especially the athletic footwear market – is seeing a rapid growth as of late, with sales continuing to rise. However, among the two most prominent names in the category, Nike Inc (NYSE: NKE) and Under Armour Inc (NYSE: UA), which one should investors put their money in to profit from this growth?

Susan Anderson, FBR Capital Markets, was on CNBC recently to answer that question.

Strong Trends In Sneakers

"I think what's driving the strong sales trend here is the shift to athleisure and more casual dressing," Anderson began. "So, not just within performance in sneakers, but we are also seeing casual-run, walk sneakers doing very well. And, I think, a lot of that's helping to drive these strong trends."

Related Link: Morgan Stanley Says Athletic Footwear Is "The Trend To Play"

On Nike's dominance in the sneakers market, Anderson said, "Nike is obviously very established in the footwear market. Under Armour is coming up and, I think, they will continue to take market share."

Under Armour: The Better Pick

Anderson was asked the reasons for why she is more bullish on Under Armour instead of Nike. She replied, "For Nike, it's really more valuation; it's trading above its historical P/E multiple more like 20 times at 24 times right now. For Under Armour, we see much more runway for growth over the next five to 10 years. Over the next five years, we see continued high 20 percent low of 30 percent top-line growth and a lot of this driven by footwear, which they right now have very small market share in versus Nike."

She continued, "For Under Armour they have about 2 percent of the basketball footwear market share and just 5 percent or running versus Nike over 90 percent for basketball and about 60 percent for running. So, I think Under Armour has much more room to grow over the next 10 years," Anderson concluded.

Image Credit: Public Domain

Posted-In: Athleisure CNBC FBR Capital Markets Susan AndersonMedia Best of Benzinga

 

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