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What's Concerning Jim Cramer About Under Armour's Federal Probe

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Let's talk about our Real Money stock of the day. 

Under Armour (UAA) posted stronger-than-expected third-quarter earnings Monday, but an ongoing investigation into the sportswear group's accounting practices by federal regulators will likely cloud the company's near-term market performance.

Under Armour said earnings for the three months ending in September came in at 25 cents per share, essentially flat to the same period last year and 7 cents ahead of analyst expectations.

Looking into the final months of 2019, Under Armour said it expects full-year earnings at the higher end of its prior forecast of between 33 cents and 34 cents per share, and said revenues would be about 2% higher than 2018 thanks in part to lower-than-expected excess inventory, down from its previous estimate of an increase of between 3% and 4%.

Jim Cramer, when asked about Under Armour, said that he was concerned about Under Armour, said that he had questioned the "action in the stock" last week. 

Real Money's Stephen Guilfoyle wrote about Under Armour Monday morning. 

"[Under Armour] posted third-quarter earnings on Monday morning and nobody cared. The far bigger story had been reported first at The Wall Street Journal and then everywhere else that the firm is cooperating with investigators at both the SEC (Securities and Exchange Commission) as well as the Justice Department regarding past revenue recognition accounting. At stake it appears is whether or not sales had been shifted from quarter to quarter. It is important to note that the firm acknowledges the probe, and flatly states that it's "practices and disclosures" were appropriate," wrote Guilfoyle. 

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