Talking Numbers

Could this company be the next Nike?

Talking Numbers

Sports apparel maker Under Armour beats the street. Will the company's high growth propel it to MVP status?


Shares of Under Armour hit an all-time high Thursday after the sports apparel maker soundly beat its fourth-quarter estimates.

Under Armour's sales of $682.2 million for the last three months of 2013 easily trounced analysts' estimates of $619.9 million. Earnings per share, at $0.59, beat the Street's expected $0.53.
That sent Under Armour shares up 22% in just one day, its second best trading day since October 28, 2008, when it gained 26.3%.

(Read: Under Armour shares jump as athletic wear demand soars)

Speaking to CNBC's Closing Bell on Thursday, Keven Plank, the CEO of Under Armour who started the company from his grandmother's basement, said:

"Under Armour had a huge 2013 that we performed equally on the top as well as on the bottom.  You know, we’re bringing a balanced approach and after 8 years as a public company, to average 30% top-line, 30% bottom-line growth, I think you see a really balanced company that’s beginning to come into its own a little bit."

Steve Cortes, founder of Veracruz TJM, believes there are two reasons to expect more from Under Armour in the future.

"First is that this company has registered 20%+ growth for 15 straight quarters," says Cortes. "They are projecting now in terms of their forward guidance that they will do the same in 2014."

Cortes also believes Under Armour's direct-to-consumer sales helps it stand apart from competitors like Nike and Lululemon. Though Under Armor sales are about one-tenth the size of Nike's, its 35% top line growth rate for the last quarter dwarfed Nike's 8% revenue growth over its most recently reported quarter.

(Watch: Under Armour CEO: Big strides in running shoe market)

"[Under Armour] now have about 40% of their total net revenue from e-commerce," says Cortes. "They don't have to get in price wars. This company's going to keep humming."

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, agrees with Cortes that things are looking positive for Under Armour, especially where the technicals concerned. 

"Today's explosive move is likely the beginning of the next leg up," says Ross. "Even coming into today, the stock was on a fantastic run, up almost 100% over the last 12 months within [a] well-defined trend channel."

Though Ross' charts show the stock consolidating in the last quarter of 2013, it was able to stay above its 100-day moving average since March of last year. Thursday's move saw a decisive break out of its trend channel, according to Ross. 

"That's where moves start, that's not where they end," says Ross. I would continue to be a buyer of this stock."

To see the rest of the discussion on Under Armour with Cortes on the fundamentals and Ross on the technicals, watch the video above.

 

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