NEW YORK (
-- Under Armour
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 41.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- UA's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
- UNDER ARMOUR INC has improved earnings per share by 29.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNDER ARMOUR INC increased its bottom line by earning $1.33 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.33).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Textiles, Apparel & Luxury Goods industry average. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $34.86 million to $45.99 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, UNDER ARMOUR INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth worldwide. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature. The company has a P/E ratio of 51.6, equal to the average consumer non-durables industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Under Armour has a market cap of $3 billion and is part of the
industry. Shares are up 46.2% year to date as of the close of trading on Wednesday.
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