The firm said,"We don't believe the market is factoring in the magnitude of UA's LT revenue growth potential."
Under Armour's stock is up 1.70% to $51.97 in pre-market trade.
"We think sales can exceed $15B over the next 10 years, based on strong secular athletic trends across multiple categories and our proprietary survey work that shows UA's growing dominance with the youth generation and women. With shares off ~20% from highs, we think valuation looks attractive here," Jefferies noted.
TheStreet Ratings team rates UNDER ARMOUR INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNDER ARMOUR INC (UA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 expanding profit margins. 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 analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.8%. Since the same quarter one year prior, revenues rose by 36.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- UA's debt-to-equity ratio is very low at 0.14 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 1.32, which illustrates the ability to avoid short-term cash problems.
- UNDER ARMOUR INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, UNDER ARMOUR INC increased its bottom line by earning $0.75 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.75).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 73.3% when compared to the same quarter one year prior, rising from $7.81 million to $13.54 million.
- 49.56% is the gross profit margin for UNDER ARMOUR INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 2.11% trails the industry average.
- You can view the full analysis from the report here: UA Ratings Report