Under Armour’s Stock Grew 13% In The Last Week – What’s Next?

by Trefis Team
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Under Armour’s stock (NYSE: UA), a sports equipment company that manufactures footwear, sports, and casual apparel, has increased 13% over the last five trading days (one week) and currently stands at around $22. It should be noted that the broader S&P500 returned only a marginal growth during the same period. UA stock spiked as it reported strong fiscal Q2 2021 results with revenues of $1.35 billion beating market estimates by $130 million and adjusted earnings per share of 24 cents coming ahead by 18 cents. The company saw its revenues grow 91% year-over-year (y-o-y) during the quarter, driven by a 101% increase in North American sales. Its wholesale revenues increased 157% y-o-y to $768 million and direct-to-consumer revenue increased 52% to $561 million during the quarter. The company’s management also raised its revenue outlook for 2021 to a low-20s percentage y-o-y increase, replacing the previous high-teen increase guidance. The GAAP earnings per share forecast was also raised to range between $0.14 to $0.16, replacing the previous guidance of $0.02 to a loss of $0.04. The company also sees full-year adjusted EPS of $0.50 to $0.52 vs. the $0.28 to $0.30 prior view and $0.33 consensus.

Now, is UA stock poised to grow further? The athletic apparel and footwear retailer has evolved its business to rely less on discounters and department stores and more on its own stores and e-commerce during the pandemic. Its goal has been to position the brand on a more premium level next to peers like Nike and Lululemon. After posting robust Q2 results, it seems to be moving in the right direction. We believe that the company’s stock has momentum on its side and could see further gains in the near term. Specifically, there is a 51% chance of a rise for UA stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on UA Stock Chances of Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of rising’ using last 10 year data

[1] 13% or higher return during five-day period in 45 times out of 1339; Stock rose in the next five days in 14 of these 45 instances.

[2] 24% or higher return during ten-day period in 18 times out of 1334; Stock rose in the next ten days in 3 of these 18 instances.

[3] 16% or higher return during twenty-one-day period in 154 times out of 1323; Stock rose in the next twenty-one days in 78 of these 154 instances.

 

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

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