Summary
- Under Armour’s popular brand is seeing high consumer demand.
- Issues with product availability and shipping costs are causing short-term margin pressures.
- The company is set to emerge from restructuring soon.
- The short-term share price may see some pressure. I believe the current share price is a fair value, but I also see a good potential for appreciation later this year.
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Under Armour (UAA, UA) is a leader in the area of performance apparel, including footwear and accessories. The company develops its products, markets them, and distributes them as well. Under Armour’s line of products are worn by athletes worldwide but are also worn as casual wear, especially for those with active lifestyles. Like most retailers, Under Armour was impacted by the pandemic, but the company has implemented several changes including a substantial restructure plan that is helping significantly towards margin improvements. The company’s FY 21 is on track to produce strong results in revenue and EPS; however, certain headwinds may make today’s share price to be only near a current fair value.
Company Logo
The Company
Under Armour’s products are offered through other wholesalers and distributors, but the company also operates several of its own brand and factory house stores as well as its e-commerce websites. Their strong and popular brand also allows for revenue from licensing and from digital fitness subscriptions.
The company’s products offer unique advantages over traditional athletic wear. Under Armour’s product line includes offerings in materials that either help a body stay cooler and dryer in hotter temperatures or help maintain core body temperature in colder temperatures.
Under Armour’s distinctive logo is widely recognized. The company credits a breakthrough in customer awareness of its products following their inclusion in the Oliver Stone film, “Any Given Sunday”. This exposure helped propel the brand to be the sports icon that it is today, and the company continues to align itself in the sporting world through promotional strategies involving programs at high schools, colleges, and professional sports teams.
