Under Armour Inc. (UA, Financial) had a great year in 2015, but that is not the case this year. Despite reporting strong results in the prior several quarters, the stock currently trades in red. However, in the most recent quarter, the company shared earnings per share of 29 cents, beating the consensus estimates by four cents. Revenue came in at $1.47 billion, $10 million more than the estimates.
It is well known that Nike (NKE, Financial) holds a leading position in the apparel industry and cannot be compared to Under Armour due to its enormous size, but it is worth noting that Under Armour's sales have surged over 20% year over year each quarter for the past six years.
Moving onward, the company’s management revealed that it no longer anticipates reaching a profit target of $800 million by 2018. This is because it is investing largely in impending growth, which includes making its international business strong and increasing its focus on the footwear segment.
Apart from this, the company is making massive investments in other areas like renovating its manufacturing processes and beginning new high-end clothing lines. The company recently launched its high-end Under Armour Sportswear line.
On the other hand, the company is working hard to grasp a robust position in the wearables segment. As a matter of fact, the company manufactures a branded fitness tracker called “the Band” and  has prolonged its experiment in health data gathering further by incorporating a body fat percentage scale and a heart rate monitor.
Under Armour also launched its own fitness tracking application to produce an efficient and complete fitness analysis ecosystem. Furthermore, the company has plans to assimilate fitness trackers directly into its products, throwing light on its robust business model.
One more thing to notice is that Under Armour is gradually escalating its presence in the international market, a great achievement for the company considering its long-term prospects. Furthermore, the company has active deals with several international stars that will certainly help spread its brand among consumers.
China plays a very significant role when it comes to the international market and the company is performing amazingly well in Greater China. It reported sturdy third-quarter sales in China on the back of rapid growth in running and basketball.
Summing up
Although Under Armour has been facing some short-term problems, its long-term prospects still look good. The company is progressively making its presence stronger in the international market, suggesting it can achieve huge benefits in the long run. Thus, investors should consider buying shares of Under Armour despite the short-term problems.
Disclosure: No position in the stock in this article.
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