Under Armour to report Q1 earnings before the market opens on Tuesday
Under Armour (UA, UAA) is scheduled to report results of its first fiscal quarter before the market open on Tuesday, May 4, with a conference call scheduled for 8:30 am EDT. What to watch for:
1. GUIDANCE: On February 10, Under Armour forecast Q1 earnings per share of 3c and revenue up approximately 20% y/y, against analysts' estimates at that time calling for a loss of (5c) and $1.09B, respectively. Looking to fiscal 2021, Under Armour forecast adjusted EPS of 12c-14c and revenue up in the high-single digits. Analysts currently predict EPS of 20c on revenue of $4.93B.
Pivotal Research analyst Mitch Kummetz said he sees reasons why Q1 could be stronger than what Under Armour was expecting. He believes that stimulus was a catalyst and not factored into guidance and notes the company's Google Trends search volume was "healthy" for Q1.
2. RESTRUCTURING UPDATE: Last year, Under Armour approved a restructuring plan to better align its financial resources to support the company's efforts as the consumer landscape shifts. As part of the plan, Under Armour is cutting about 2% of its global workforce of 15,000.
3. FOOTWEAR COULD BE AREA OF RELATIVE STRENGTH: Jefferies analyst Randal Konik said his web analysis points to strong improvement for Under Armour average selling price data on a year-over-year basis in both the apparel and footwear categories. He found Under Armour's footwear average selling prices increased by about 2000 basis points more than those of Nike (NKE) from January to April, which, paired with strong web traffic performance, lead him to believe that the company's footwear could be an area of strength when the company reports on May 4, Konik tells investors. He has a Buy rating and $30 price target on Under Armour shares.
4. IMPROVING OUTLOOK: Williams Trading analyst Sam Poser upgraded Under Armour to Buy from Hold with a $30 price target. A 40% reduction in the number of products offered since 2017 and re-targeting the Under Armour brand towards the "focused performer" has set up a turnaround, while a macro trend towards an active lifestyle and stimulus money should bring more people to the brand, argues Poser. In addition, Under Armour has the opportunity, "in a very measured manner," to engage some retailers with whom Nike has decided to longer do business, Poser said.