Under Armour's (UA, Financial) first-quarter earnings were impressive by every measure. The organization yet again created a quarter of 25% or more revenue development, saw extremely forceful footwear and worldwide sales development, and is directing for yet more margin change this year. Despite these positives, shares fell nearly 5%, highlighting a significant issue in the shares of Under Armour.
The issue is that the company is overpriced, having little space to trade higher. With a specific end goal to go higher, Under Armour needs to surpass bullish estimates in every metric in the months to come. However, that doesn’t mean Under Armour can’t move higher. Given the company’s impressive growth story, it won’t be a surprise if the stock moves higher in the months to come. Hence, I still think Under Armour is a buy.
The best thing for Under Armour and investors throughout the past year has been basketball. Under Armour is tackling goliath Nike (NKE) in a sport where they hold 90%+ market share. The company is sponsoring Stephen Curry of the Golden State Warriors, who is one of the main two contenders for this current season's MVP honor.
In February, Under Armour propelled Curry's own particular namesake shoe line with the Curry One. This was the biggest crusade in organization history. Curry was the most obvious vote in the NBA All Star Game and is one of the best players in the association. Curry is the envoy for Under Armour and its developing vicinity in the $4.5 billion basketball shoe market. Obviously, Under Armour additionally offered Kevin Durant $265-285 million for a 10 year bargain, before he decided to keep up his agreement with Nike. Unmistakably, Under Armour is focused on picking up market share in the ball market, a positive sign for investors.
Conclusion
The company is making headway despite competing against industry giants like Nike and Adidas. Under Armour’s growing presence in basketball and golf makes it a force to be reckoned with. The company’s double-digit growth doesn’t look like it will come to an end soon as it still has a lot of room to grow. Hence, I think Under Armour is still a good buy despite its stretched valuation.
