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Under Armour (UAA) Moves 6.9% Higher: Will This Strength Last?

·2 min read

Under Armour (UAA) shares soared 6.9% in the last trading session to close at $25.53. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.7% gain over the past four weeks.

Shares of Under Armour are gaining as the company’s first-quarter 2021 results reflect strength in both North America and international regions as well as robust e-commerce sales. During the quarter, both the top and the bottom lines surpassed the Zacks Consensus Estimate and improved year over year. Moreover, the stronger-than-anticipated results prompted management to raise full year view.

The company now anticipates full-year 2021 revenues to increase at a high-teen percentage rate, up from the prior projection of high-single-digit percentage rate increase. This reflects a high-teen percentage growth rate in North America and low thirties percentage growth rate in the international business. Under Armour now envisions adjusted earnings in the band of 28-30 cents a share, up from previous expectation of 12-14 cents a share.

The company’s robust quarterly performance highlights its improved operating model and investments that helped meet strong demand. Notably, adjusted earnings of 16 cents a share fared far better than the Zacks Consensus Estimate of 4 cents. The bottom line also showcased a sharp improvement from a loss of 34 cents reported in the year-ago period. Meanwhile, net revenues of $1,257.2 million comfortably outpaced the Zacks Consensus Estimate of $1,124 million and surged 35.1% on a year-over-year basis.

Price and Consensus

Price Consensus Chart for UAA
Price Consensus Chart for UAA

This sports apparel company is expected to post quarterly loss of $0.12 per share in its upcoming report, which represents a year-over-year change of +61.3%. Revenues are expected to be $1.01 billion, up 43.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Under Armour, the consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on UAA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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