Just about 18 months ago, the stock was trading at all-time highs, only to come crashing down soon after.
Down 27% year-to-date and 55% over the past 12 months, relentless competition and nagging growth concerns have encumbered the stock. However, we think Under Armour's current situation offers a unique point for entry, given its low-key valuations and the possibility for a gradual global sales expansion.
For the longest time, Under Armour was a serious threat to Nike's (NKE) control over the market. Despite its inability to match Nike in scale or size, Under Armour was a force of nature, growing at a rapid clip.
One could argue that these are trailing sales figures, and the math may not hold for future trajectories. Judging by sales estimates, the stock is now trading at a mere 1.6 times forward sales estimates, half the average of the past five years. The company is also trading 15% lower than the broader S&P 500 index, and over 35% cheaper than Nike.
Clearly, valuations have baked in all the negatives, with the dented growth story chiefly fueling the fear plaguing Under Armour.
Given that Under Armour is yet to plow new territories across the globe, sales should witness double-digit growth for years to come.