NEW YORK (TheStreet) -- Under Armour (UA) shares are climbing 0.37% to $81.49 in after-hours trading on Monday after the sports apparel company announced the creation of a new special class of shares that lack voting power.
The new Class C non-voting stock will be issued to all existing Class A and B shareholders through a stock dividend which will have the same effect as a two-for-one stock split.
Each Class A and B shareholders will receive one share of the new Class C stock.
The Baltimore, MD-based company will send an application to the New York Stock Exchange for a new listing for the new stock which will trade under a different symbol than Under Armour's current UA symbol.
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 some important positives, 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, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 25.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 49.57% 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 1.45% trails the industry average.
- Compared to its closing price of one year ago, UA's share price has jumped by 45.02%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- UNDER ARMOUR INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. 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 $0.95 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.95).
- Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.40 is sturdy.
- You can view the full analysis from the report here: UA Ratings Report