Under Armour’s latest earnings were good but not great. That is something growth investors DO NOT want to hear! Beating the expectations by just a little is a sure fire way to disappoint Wall Street and UA lost about 10% in the two trading sessions following their earnings announcement.
Today’s investors are an impatient bunch and anyone looking purely for growth probably lacks patience. That is one of the perils of buying stocks like Under Armour that are priced for perfection. Little does it matter whether the company is rock solid (as I believe UA is) any earnings stumble will take down the stock and take it down fast.
Luckily for Under Amour, there is a wonderful intack story to be told as this leisure and sports apparel company continues to take aim at Nike and anyone bigger than it is. I suggest you start paying attention to what people are wearing (including kids) and I believe you will see more and more UA logos as time goes on. It is an already extremely popular company that makes quality sports apparel that will, over time, make a big dent into Nike. This is only my opinion but I feel pretty confident in it by the superb endorsement deals it is making and its entry into technology clothing.
UnderArmour merchandise is not cheap. But it is made especially well and feels great to the skin. Thats why I like and wear it and why I am willing to pay a premium for something that feels good and looks good. Sort of like the Apple premium and it sure works well for them.
The stock is admittedly expensive in P/E terms but you are getting a company that has proven leadership with a great line of products and there isn’t, at least at this point anyway, reason to believe things will change. I don’t mind paying more for a company that I can see with my own eyes is increasing in popularity along with my personal experience of using and loving their product. That is the case with Under Armour and why any PATIENT growth investor might consider picking up some shares here in the low $90’s. The stock may indeed go down more, especially if the market turns back down, but UA seems to be setting up for a blockbuster Christmas quarter.