Under Armour, Inc. – Value Analysis (NYSE:UA) : May 1, 2017

Capitalcube gives Under Armour, Inc. a score of 79.

Our analysis is based on comparing Under Armour, Inc. with the following peers – Lot78, Inc., Cia Hering SA, RYU Apparel Inc and TRON Group, Inc. (LOTE-US, HGTX3-BR, RYU-CA and TGRP-US).

Investment Outlook

Under Armour, Inc. has a fundamental score of 79 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It trades at a lower Price/Book multiple (2.11) than its peer median (2.94).
  • The market expects UA-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • UA-US has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • UA-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • While UA-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company is likely overinvesting in a business with only median returns.
  • UA-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

UA-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 7.04% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 0.30%), and a well-cushioned interest coverage level of 14.42x, UA-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include TGRP-US.

UA-US has maintained its Quick & Able profile from the recent year-end.

  • UA-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 84.02x in 2014.
  • The decrease in its interest coverage to 14.42x from 16.39x (in 2016) was also accompanied by a decrease in its peer median during this period to -17.93x from -16.95x.
  • Interest coverage fell 0.98 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • UA-US‘s debt-EV is similar to last year’s high of 7.04%, which compares to a low of 7.04% in 2016.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (7.04%) and the peer median (0.30%).

Access the detailed analysis for Under Armour, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Lot78, Inc. 0 0.35 -2050.91 -2881.34
Cia Hering SA 1.23 3.75 20.72 1830.75
RYU Apparel Inc 0.3 2.19 -50.28 -1845.89
TRON Group, Inc. 0 0.43 0 999
Under Armour, Inc. Class C 7.04 3.04 14.42 54.31
Peer Median 0.3 2.19 -17.93 54.31
Best In Class 0 3.75 20.72 1830.75

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Company Profile

Under Armour, Inc. engages in the developing, marketing and distributing of branded performance apparel, footwear and accessories for men, women and youth. It operates through the following geographical segments: North America, Latin America, Europe, the Middle East, and Africa. The company was founded by Kevin A. Plank in 1996 and is headquartered in Baltimore, MD.

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