NEW YORK (TheStreet) -- Shares of Under Armour Inc. (UA) are higher by 2.41% to $69.38 at the start of trading on Wednesday, following a ratings upgrade to "overweight" from "neutral" at Piper Jaffray.
The firm said it raised its rating on the sports and workout apparel retailer as it believes the company will see significant market share gains, with emphasis in women's footwear and international. Piper Jaffray believes the company's market cap will double over time.
Piper upped its price target on Under Armour stock to $78 from $63.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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 several positive factors, 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, 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 analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 11.9%. 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 4.37%.
- 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.
- You can view the full analysis from the report here: UA Ratings Report
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