NKE will be added to the Dow Industrials average this month and that means the first week of October, index funds including pension funds that buy the "Dow" will be buying NKE as part of this basket. This may boost the price of Nike. My expectation as a private investor is that NKE will reach and exceed 70 in the coming 6 months. There may be a market correction at some point but even so this would provide a buying opportunity. Today there was a runup, then there may be a technical pullback (buying opportunity) and after things settle down the stock should start ratcheting up toward 70+. That's my expectation and personal investment goal for this stock.
It's not UA against NIKE, per se. It's UA AND NIKE against the next tier of athletic wear leaders. The story is not UA versus NIKE, but rather, how Nike and UA have captured the two top spots this year in market share, branding and financial returns. I own both UA and Nike because I see these not so much as competitors but as the top two players in the fastest growing niche in retail/sports clothing.
Traders familiar with UA have mentioned that UA often drops immediately after earnings, then recovers, even if the earnings are outstanding as they were this quarter. I am long and held my position during this blip on the radar - expect to see the stock return to the mid-80s and that will be helped by short covering by those who rushed to sell thinking this is a trend instead of a radar blip.
Lots to fuel the momentum. Can't argue with the fundamentals and underlying financials. Can't argue with the brand or China strategy just unfolding. Also, the terrific comments and guidance by the very strong management team is beginning to find its way into the news reports - ready the full commentary if you haven't yet. Very encouraging and positive and extremely detailed, financially.
Last but not least - many retail analysts and news commentators have observed that athletic wear will lead retail sales this Xmas and UA will benefit from this - even if retail sales overall are weaker or flat. Lots of Xmas presents will be athletic wear this year and partly because UA products are stylish, high tech and a bit pricey so kids, teens, 20 somethings ask for them as gifts exactly because they are premium products.
My advice as always is to read the financials, the management commentary, the forward looking guidance, and decide if you feel the valuation is fair (yes, UA does have a high PE but so do many other well known momentum stocks) and decide for yourself if you feel the momentum will continue. I would NOT want to be short the stock of this very strong trendy, financially sound and well managed company.
I've been off the board for awhile but really intrigued to see you idiots are still cluttering up this board with trash and making it unusable. No wonder the stock is crashing. I currently own no shares although I do have a buy in price target. So many fools dabbling with this stock makes it an interesting play now and then. Would rather see comments on the so-called "shareholder letter" but instead we get mish-mash. Social media in action...tsk, tsk.
My sense is that UA has a unique niche, great designs, and is defending their niche and competing successfully with Nike. Nike and UA seem to be both beating other sports apparel companies. Financially, I was encouraged that Nike beat the street with strong future projections all around. I visited a UA store recently and liked the store layout, merchandise, etc. With UA in the top niche in this sector, and with their growth positioning, I like their prospects. Also, my brother in law who is in his 20s and a fitness nut, asked for some Under Armour duds for his birthday this month and he's very choosy. The financial performance, prospects for the future, great Nike results etc. and my brother in law's endorsement - persuaded me to acquire some UA today near the market close. It was my first purchase of this stock.
A company that achieves 450% growth domestically is a growth story and is rewarded on growth and future potential - a true momentum stock. Also, low international sales is a GREAT story because it means UA has significant upside potential from international sales - esp. in Latin markets. So this is not a stock to be valued on conservative comparisons and fundamentals - it is a momentum stock and the popularity among teens and fitness buffs translates directly into popularity among investors. People do invest in what they know and are familiar with and brands they like. Having said this, the earnings report in a couple of weeks will determine whether the stock spikes up or down short term.
A CNBC commentator today mentioned that athletic wear will be a hot gift category this season so even if retail sales are down, athletic wear could be the star outperformer. Having said this, it is also possible that the 4th quarter will be down overall seasonally because of the 800,000 government workers who had to spend on credit for a few weeks, and the other million contractors, vendors, restaurant workers and others who lost income during the shutdown - and cannot recover that lost income because they weren't technically government workers. Honestly, the 4th quarter could go either way - a down retail quarter pulling everything lower - or - a down retail quarter with athletics outperforming.
This kind of analysis and thinking - based on traditional valuation metrics, not momentum valuation - has encouraged a lot of investors to short the stock so if the company does well in its earnings report tomorrow, there is also a likelihood that short sellers will be forced to cover and this would spike the price. Another consideration that bears attention.
The runup required a profit taking sell-off before it can establish and hold the recent highs (mid-80s). This sell-off on such positive news can be VERY misleading. Sometimes there is a sell-off followed by a recovery and run-up, so this drop could be a consolidation of the new bottom - or it could be followed by a return of buyers after the sellers are shaken out. Unexpected by many investors I'm sure but technically healthy.
Oct. 24 - UA announced Q3 revenues increased 26% to $723M. Net income grew 27% to $73M. EPS were .68 against .54 in the same quarter last year. CEO Kevin Plank said this was the FOURTEENTH straight quarter showing net revenue growth of 20% or more. Cash increased 19%. Inventory increased to 59% going into the Christmas season. Long term debt decreased. New stores in China, Japan and Mexico are expected to drive future growth. All in all, a strong report.
I didn't read the Motley Fool posts - actually I originally invested in Nike when it was added to the Dow - which was a good investment. While reading about Nike I noticed everyone was talking about UA breathing down their necks, competitively - then saw that Nike and UA dominate the space which someone as called an athletic-wear "duopoly."
So then I checked UA's financial track record and saw the momentum and saw that the numbers, growth, fundamentals, etc. were strong. Finally, my wife's younger brother who is 25 asked for UA fitness clothes for his birthday and Xmas. I saw the brand in #$%$ and other stores and bought a few items for myself. That's the personal research that brought me to this stock.
I bought in the 70s and have sold some covered call options which were quite profitable. I'm now mostly long in the 70s. I also discovered some nice message sites where brokers chat about stocks and there was a consensus that UA tends to drop after earnings and this time it bounced back faster than usual which is a good sign. The earnings report and management comments raising 2013 and 2014 guidance was icing on the cake.
For me, this was a very good straight line decision based on following the threads and doing personal research - love the Internet. This kind of research couldn't be done 20 years ago!
Sentiment: Strong Buy
The recent billion dollar settlements are warning signals - these massive settlements will be reflected in the financials going forward esp. if there are more lawsuits to come which is hinted at in the analysis. JNJ had a nice run but if the market corrects in the next 60 days, or when tapering kicks in, JNJ will take a hit.
Now you see why I avoided this stock...and this board. However, there will be a place to buy back in, after the dust settles. The unexpected earnings AND revenue miss is compounded by the equally unexpected pre-earnings announcement - they didn't wait for people to gamble and run up the stock on expectation of beating the street so they saved some investors that dismal fate, but inflicted another smash blow with the surprise announcement. The loss of confidence will impact the stock, short term. There are better places to put investment cash. I am currently long on Nike, for example.
I'm not an insider. Just someone who has been a long-time investor and who watches the stock closely. I read and tune into the management earnings calls and read what I can on the technology and related markets.
I watch the companies I invest in very closely, am very patient as an investor. My investments in the past year have included ABBV (when Abbot did the split), Coinstar (before they became Outerwall) and most recently Nike (which is being added to the Dow). I watch for news announcements that haven't fully impacted the stock but are expected to move the stock in the future - that happened with ABBV and Nike. I am currently not invested in ABBV or OUTR (Coinstar) but watch them for opportunities to buy on weakness. I have accumulated shares of OCLS over the years for long term appreciation. Last year I made 55% on my investments.
Research shows that the day after an earnings beat the stock price of NKE increases at least 1.75% - suggesting a price of 71.50 to 72+ and possibly higher in the first week of Oct. when the index funds buy NKE for pension funds. A beat the street plus new Dow listing and growth prospects bode well for NKE.
Look at Nike's earnings history - I don't care where the earnings come from as long as they keep coming and coming.
Seems like short covering drove NKE higher than normal. I'm pleased with my buy-in which was in the 60s. Today I also bought UA for long term (6 month) appreciation.
The earnings came out after hours and all the shorts had to rush to cover which drove it up on the open the following morning. It shot up, then dropped back when the short covering was over. Now it's either forming a new bottom, or fell back to a range. My feeling is that the range will be 71 to 75 for awhile until excitement surrounding the holiday season kicks in. We may see higher prices when the pension funds buy in the first week of October, now that NKE is in the Dow.
Another source says OCTOBER 24 - so it's either Oct 21 or 24. The main thing is to watch for a price movement on the earnings announcement.