Business Overview and Segments
This company is the name-sake of the Under Armour brand. This company was a darling of Wall St for many years until 2017, meaning investors loved it for the success of the stock as it went from $1.50 to $50. However, the expectations became high for the company and in 2017 it faced issues with operating efficiency as its operating expenses got out of hand. Their FCF margin fell from 6.5% to 1.3%, while their growth dropped from 20-30% per year to just 3%. The company started a restructuring program to get the company back to its golden days, but this has taken longer than expected, causing Wall St to run out of patience and smash the stock down ever since. They’ve got new management in charge now and their results are improving as their FCF margin is now 4%. However, there is still a long way to go and their growth has slowed to essentially flat (0%), causing many on Wall St to think that the brand was a fad that has lost its popularity. However, I personally believe UA to still be a loved brand that will make its way through this. It’s only a young company and has titan competitors in the form of Nike and Adidas, and new management are sharper than its predecessors. So with a brand that is still loved by consumers, we may not see 20% growth like before, but UA has been too strongly rejected by Wall St in my eyes.
Brand – consumers still desire the UA logo.
Key Facts and Figures
| Risk of Bankruptcy | Low |
| Last Year’s Growth | 3% (Low) |
| ROIC (Company Quality) | 7% (Moderate) |
| Free Cash Flow Margin (Company Strength) | 4% (Poor) |