NEW YORK (TheStreet) -- Under Armour (UA) shares closed trading up 2.07% to $84.90 on Monday after Jordan Speith, one of the apparel company's athletic endorsers, won the U.S. Open golf championship over the weekend.
The Baltimore-based company signed Speith in 2013 to a four year contract before he had won a single championship. Fast forward to 2015 and Speith has claimed his second major championship of the year.
Speith's win continues the championship run of Under Armour signed athletes.
Last week, Stephen Curry, an Under Armour signed athlete who won the NBA's Most Valuable Player award this past season, hoisted the Larry O'Brien trophy as Curry and his Golden State Warriors beat Nike's (NKE) Lebron James and the Cleveland Cavaliers to win the NBA title.
Speith, 21, entered the U.S. Open as the number two golfer in the world after winning the Masters earlier this year.
In January, Speith signed a new 10-year exclusive Under Armour contract that will keep him in the company's apparel on the golf course through 2025.
Insight from TheStreet's Research Team:
Under Armour is covered by TheStreet's Growth Seeker premium services and was mentioned in a Real Money Pro article entitled 'This Week's Most Important 6 Themes to Watch'. Here is what TheStreet's Brian Sozzi had to say about the stock:
Nike is having some performance problems in its core running business, something brought to light in the prior period's earnings call. The market chose to ignore that bit of news, however, raising the risk for disappointment this time around. Under Armour has some strong new running shoes in the market. And Under Armour's Curry One basketball sneakers continue to be hot sellers (as in they are out of stock), which could be causing a little bit of share loss for Nike in its Jordan brand, believe it or not.
-Brian Sozzi,' This Week's Most Important 6 Themes to Watch', 6/22/2015
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, 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 9.3%. 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 40.31%, 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