Under Armour Stock In Position For Further Gains?

by Trefis Team
+18.45%
Upside
17.45
Market
20.67
Trefis
UA
Under Armour
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Under Armour (NYSE: UA), a sports equipment company that manufactures footwear, sports, and casual apparel, has increased by almost 4% over the twenty-one trading days (one month) and currently stands at around $19. While revenues fell in low single-digits due to pandemic pressures, the company saw rising profitability on the back of cost cuts, and one-time asset sale benefits in the recent fourth quarter. Overall, Under Armour hopes to return to high single-digit percentage sales growth in 2021 compared to a 15% decline year-over-year (y-o-y) in full-year 2020. It also aims to achieve a positive GAAP operating income of between $5 million and $25 million. While GAAP earnings per share will probably still be in the range of negative $0.18 to negative of $0.20 per share (compared to -$1.21 in 2020), the retailer expects to book a pro forma profit of between $0.12 and $0.14. It should be noted that the broader S&P500 returned roughly flat growth over the last twenty-one days. Now, is UA stock poised to grow further? Although we believe the company remains fundamentally overvalued, Under Armour has momentum on its side, and there could be room for more gains in the stock. Specifically, there is a 51% chance of a rise in Under Armour’s stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last five years. See our analysis on Under Armour‘s Stock Chances of Rise for more details.

Five Days: UA 2%, vs. S&P500 -0.1%; Outperformed market (37% likelihood event)

  • Under Armour, Inc stock rose 2.0% over a five-day trading period, compared to a broader market (S&P500) decline of 0.1%
  • A change of 2% or more over five trading days is a 37% likelihood event, which has occurred 465 times out of 1256 in the last five years

Ten Days: UA 2.4%, vs. S&P500 4.4%; Underperformed market (38% likelihood event)

  • Under Armour, Inc stock rose 2.4% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 4.4%
  • A change of 2.4% or more over ten trading days is a 38% likelihood event, which has occurred 474 times out of 1240 in the last five years

Twenty-One Days: UA 4%, vs. S&P500 0.05%; Outperformed market (14% likelihood event)

  • Under Armour, Inc stock rose 4.0% the last twenty-one trading days (one month), compared to a broader market (S&P500) rise of 0.05%
  • A change of 4% or more over twenty-one trading days is a 14% likelihood event, which has occurred 167 times out of 1198 in the last five years

While UA stock may likely see growth in the near future, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Casey General Stores vs. PQ Group Holdings shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

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