Under Armour (UA, UAA) is scheduled to report results of its second fiscal quarter before the market open on Tuesday, August 3, with a conference call scheduled for 8:30 am EDT. What to watch for:
1. GUIDANCE: In May, Under Armour raised its outlook for fiscal 2021 and now sees adjusted earnings per share of 28c-30c vs. its prior forecast of 12c-14c. It now sees FY21 revenue up in the high teens percentage rate, an increase from its prior high single digit percentage rate. Analysts currently expect EPS of 34c and revenue of $5.33B for the fiscal year. Under Armour also guided Q2 adjusted EPS Of 4c-6c and revenue up 70%, against analysts' current consensus of 5c and $1.21B, respectively.
Deutsche Bank analyst Gabriella Carbone expects ongoing fundamental improvement, with beat and raise quarters, across apparel brands given favorable data points. The brands have sustainable top- and bottom-line tailwinds into next year as international tourism returns and supply chain headwinds ease, Carbone told investors in a research note.
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. BULLISH FRESH PICK: Ahead of the company's earnings report, Baird analyst Jonathan Komp noted Under Armourhas underperformed Nike (NKE) by roughly 40% over the past three months despite a favorable operating environment which has supported accelerated two year growth, margin upside, and favorable second half order/backlog for many brands. Komp said near-term downside may be limited and an upside to $30+ seems reasonable.
4. TURNAROUND PROGRESS: Atlantic Equities analyst Daniela Nedialkova upgraded Under Armour to Neutral from Underweight in May. The last two quarters have shown solid and convincing progress on the operational turnaround of Under Armour, Nedialkova tells investors in a research note. While the analyst still sees the brand as positioned less favorably than its bigger peers to take advantage of the currently enhanced growth opportunities, Nedialkova has seen enough progress on operational metrics in recent quarters to become more positive on the sustainability of the turnaround.
5. FOUNDER PROFITED AFTER MISLEADING INVESTORS: Under Armour founder Kevin Plank entered into a scheduled stock selling plan that netted him $138M over a six month period after allegedly misleading investors about slowing sales, Douglas MacMillan of Washington Post reported in May. The public comments and financial statements of Under Armour executives from late 2015 to early 2017 were the subject of a four-year accounting probe by the SEC, which charged Under Armour with violating securities laws. A federal judge ruled that Under Armour shareholders can pursue a lawsuit accusing the company of concealing how it pulled sales forward from future quarters to meet Wall Street revenue forecasts, Reuters' Jonathan Stempel reported. U.S. District Judge Richard Bennett in Baltimore said the shareholders' securities fraud claims were "plausible," after considering Under Armour's $9M civil settlement on May 3 with the SEC.
Under Armour
+0.66 (+3.76%)
Under Armour
+0.74 (+3.62%)
Nike
+1.195 (+0.71%)