Trade-Ideas: Under Armour (UA) Is Today's New Lifetime High Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Under Armour ( UA) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Under Armour as such a stock due to the following factors:

  • UA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.9 million.
  • UA has traded 40,766 shares today.
  • UA is trading at a new lifetime high.

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More details on UA:

Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, Asia, and Latin America. UA has a PE ratio of 91.3. Currently there are 10 analysts that rate Under Armour a buy, 1 analyst rates it a sell, and 14 rate it a hold.

The average volume for Under Armour has been 2.3 million shares per day over the past 30 days. Under Armour has a market cap of $12.3 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.86 and a short float of 9% with 5.94 days to cover. Shares are up 64.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Under Armour as a 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, good cash flow from operations, expanding profit margins and increase in net income. 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 came in higher than the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 34.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • UA's debt-to-equity ratio is very low at 0.17 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 1.19, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 739.08% to $101.87 million when compared to the same quarter last year. In addition, UNDER ARMOUR INC has also vastly surpassed the industry average cash flow growth rate of 1.36%.
  • UNDER ARMOUR INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($0.94 versus $0.75).
  • The gross profit margin for UNDER ARMOUR INC is rather high; currently it is at 51.99%. 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 2.90% trails the industry average.

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