Investment Thesis - Under Armour currently receives a sell rating due to an unattractive risk-reward profile, characterized by elevated valuation, negative growth metrics, and increased risk levels [2][6][14] - Nike is presented as a superior investment option, offering stronger financial health, higher growth metrics, and better competitive advantages [2][15] Under Armour's Performance - Over the past five years, Under Armour has underperformed significantly, with a negative performance of -56.57%, compared to the S&P 500's 87.90% and competitors like Nike (-0.86%) and Lululemon Athletica (41.40%) [3] Current Valuation - Under Armour's current P/E Non-GAAP [FWD] Ratio is 35.48, which is 126.64% above the sector median of 15.65, indicating overvaluation [4][10] - The valuation metrics show that Under Armour is more expensive than competitors like Nike (25.77) and Lululemon Athletica (18.43) [10] Growth Outlook - Under Armour exhibits negative revenue growth rates, with a forward revenue growth rate of -3.88% and a negative EPS GAAP growth rate of -23.22%, both significantly below the sector median [5][7] Profitability Metrics - The company has a weak EBIT margin of 3.98%, which is 49.65% below the sector median of 7.90%, and a negative return on common equity of -4.36% compared to the sector median of 11.53% [8][9][12] Comparison with Competitors - Under Armour's growth and profitability metrics are inferior to those of competitors like Nike and Lululemon Athletica, reinforcing the conclusion that its current valuation is too high [11][12] - The company's EBIT margin is significantly lower than Nike's (13.15%) and Lululemon Athletica's (23.02%), indicating a weaker competitive position [12][13] Risk Analysis - Under Armour has a high beta factor of 1.66, indicating greater volatility compared to the broader market and competitors, which further highlights its elevated risk level [13]
Under Armour: Is The Reward Worth The Risk?