After Tuesday's market close, the sportswear retailer's competitor Nike (NKE) reported a 2016 fourth quarter earnings beat but revenue miss.
Nike's results have positive implications for Under Armour, Growth Seeker's Chris Versace and Lenore Elle Hawkins wrote yesterday.
"The bottom line is Nike's results confirmed what we already knew and have accounted for -- some inventory and margin disruption that will be a short-term event for Under Armour and the industry," they said. "Even amid that modest disruption, we continue to see market- share gains ahead for Under Armour as investments in its women's, footwear and now sportswear initiatives bear fruit both domestically and internationally."
(Under Armour is held in the Growth Seeker portfolio. See all of the holdings with a free trial)
Following the earnings of Nike Tuesday evening, we saw many in this group fall in the afterhours, and Under Armour was one of them. The stock had been trying to get some momentum back after being torched following the Brexit disaster.
The following day saw this stock gap higher and close with some strong volume, indicating the institutions are back and buying the stock.
Closing above the resistance line (in chart) was huge, and the breakout over the RSI line noted in the top pane shows this stock has momentum.
The moving average convergence divergence (MACD) is about to put down a nice buy signal as well, and a gap is ahead near the low $40s that needs to be filled.
This stock chart is far from bullish, still below the 200-day moving average. But there is a good 10% more upside here, if the markets stay cooperative.
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Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Under Armour's strengths such as its robust revenue growth, growth in earnings per share and compelling growth in net income are countered by weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.
You can view the full analysis from the report here: UA
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.