NEW YORK (TheStreet) -- Under Armour (UA) shares are up 0.75% to $66.78 in pre-market trading on Friday after analysts at FBR Capital initiated coverage on the stock with an "outperform" rating and $81 price target after the closing bell yesterday.
Analysts at the firm like the direction the company is going and believe that not only will it gain a larger foothold in the active wear market domestically but also that the company is poised to become an international player in the market.
"We think it has multiple levers for revenue growth to potentially exceed expectations for several years, including category expansion (footwear/women's/youth) we estimate could add 20%/year to revenue over the next several years; favorable pricing through innovation, differentiated products, and channel segmentation; international expansion (estimate could add 6%/year to revenue); distribution expansion; and global sports/activewear market expansion (expected to grow +MSD over the next several years)," said analysts.
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 few notable 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, expanding profit margins and compelling growth 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 14.7%. Since the same quarter one year prior, revenues rose by 29.7%. 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 0.15 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 1.42, which illustrates the ability to avoid short-term cash problems.
- UNDER ARMOUR INC has improved earnings per share by 20.6% 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 $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 51.53%. 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 9.50% trails the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $72.78 million to $89.11 million.
- You can view the full analysis from the report here: UA Ratings Report