Under Armour (Under Armour) Predictability Rank

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What is Under Armour Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Under Armour Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Under Armour (Under Armour) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Manufacturing - Apparel & Accessories » Under Armour Inc (NYSE:UAA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

UA:USA UAA:Mexico 1UAA:Italy U9RA:Germany U9R:Germany U9RA:Germany U9R:Germany U1AI34:Brazil UAA:Austria

Address

1020 Hull Street, Baltimore, MD, USA, 21230

Website

https://www.underarmour.com

Under Armour develops, markets, and distributes athletic apparel, footwear, and accessories in North America, Asia-Pacific, Europe, and other regions. Consumers of its performance-based clothing and shoes include professional and amateur athletes, sponsored college and professional teams, and people with active lifestyles. The company sells merchandise through direct-to-consumer, including e-commerce and more than 400 combined factory house and brand house stores, and wholesale channels. Under Armour also operates a digital fitness app called MapMyFitness. The Baltimore-based company was founded in 1996.

Executives

Shawn Curran	officer: Chief Supply Chain Officer	1020 HULL STREET, BALTIMORE MD 21230
James A Dausch	officer: Chief Consumer Officer	1020 HULL STREET, BALTIMORE MD 21230
Stephanie Linnartz	director, officer: President & CEO	10400 FERNWOOD ROAD, BETHESDA MD 20817
Carolyn Everson	director	C/O THE HERTZ CORPORATION, 225 BRAE BOULEVARD, PARK RIDGE NJ 07656-0713
Patrick Whitesell	director	11601 WILSHIRE BOULEVARD, SUITE 1600, LOS ANGELES CA 90025
Mehri Shadman	officer: Chief Legal Officer	1020 HULL STREET, BALTIMORE MD 21230
David Baxter	officer: President, Americas	1415 MURFREESBORO ROAD, GENESCO INC., NASHVILLE TN 37217
Jerri Devard	director	120 E 87TH STREET, #P6A, NEW YORK NY 10128
Westley Moore	director	325 WEST HURON STREET, SUITE 412, CHICAGO IL 60654
David Bergman	officer: Chief Financial Officer	1020 HULL STREET, BALTIMORE MD 21230
Aditya Maheshwari	officer: Chief Accounting Officer	1020 HULL STREET, BALTIMORE MD 21230
Lisa K. Collier	officer: Chief Product Officer	1020 HULL STREET, BALTIMORE MD 21230
Browne Colin	officer: Chief Operating Officer	1020 HULL STREET, BALTIMORE MD 21230
Tchernavia Rocker	officer: Chief Administrative Officer	3700 WEST JUNEAU AVENUE, MILWAUKEE WI 53202
Stephanie L. Pugliese	officer: President, Americas	170 COUNTRYSIDE DRIVE, BELLEVILLE WI 53508