|Bid||19.60 x 1300|
|Ask||0.00 x 4000|
|Day's Range||20.00 - 20.50|
|52 Week Range||12.50 - 24.96|
|Beta (3Y Monthly)||0.16|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
M&A activity in the financial markets is picking up, as record levels of corporate cash converged on a steep market sell-off in late 2018 to create a plethora of acquisition opportunities, and corporations took advantage. Thus, it's no surprise that M&A rumors have started to swirl around athletic apparel brand Skechers (NYSE:SKX). Specifically, there has been chatter that global apparel giant V.F. Corporation (NYSE:VFC) is interested in buying Skechers at $40 per share. Skechers stock trades just north of $25. Naturally, the stock bounced higher on those rumors. Wells Fargo is skeptical such an acquisition will actually happen. Their rationale -- that Skechers doesn't really fit into the VFC wheelhouse -- makes sense. VFC's biggest brands include names like Vans, Timberland and North Face. Those have some, but minimal, overlap and synergies with Skechers. InvestorPlace - Stock Market News, Stock Advice & Trading Tips As such, a VFC acquisition of Skechers seems unlikely at this point in time. But, that doesn't mean Skechers stock won't be acquired in 2019 at a big premium. Instead, this rumor goes to show that there is high M&A interest related to Skechers, as there should be. The company and stock have "buyout target" written all over them. Thus, as M&A activity picks up in 2019, Skechers stock could very likely be acquired by a bigger retail company looking to expand into the athletic apparel space. ### VFC May Not Be the Buyer The rumor floating around is that VFC will buy Skechers at $40 per share. Skechers stock initially traded higher on the news. Then, it gave up some of those gains as investors questioned the legitimacy of the rumors. * 7 Retail Stocks to Buy for the Rise of Menswear Investors are right to express skepticism. VFC has built a portfolio of global apparel brands through acquisitions. In the 1960's, VFC acquired leading jeans brand Lee. Over the next fifty years, VFC acquired Wrangler, Bulwark, North Face, Nautica, Vans, Reef, Timberland, and many, many more. This M&A activity hasn't slowed recently. Over the past decade, VFC has made numerous brand acquisitions, both small and large. But, Skechers doesn't really fit into the VFC wheelhouse. Skechers is an athletic apparel brand which rubs elbow with Nike (NYSE:NKE), Adidas (OTCMKTS:ADDYY), and Under Armour (NYSE:UAA). There isn't much overlap between Skechers and North Face, or Skechers and Vans. Granted, VFC could be looking to make a play in an entirely untapped mainstream athletic apparel market. That would make sense. After all, the athletic apparel market is where all the growth is today. Skechers gives them a cheap entry into that big growth market. But it isn't likely, because VFC usually acquires companies within its wheelhouse. As such, VFC probably won't buy Skechers any time soon. ### But Skechers Is a Buyout Target Although VFC likely won't be the buyer, Skechers stock is a serious buyout target in 2019. The company has all the characteristics you'd want in a buyout target. Skechers has grown revenues at a consistent double-digit rate over the past five years, and has broad and global exposure to the rapidly growing athletic apparel market. Gross margins are high, and have consistently trended higher over the past five years. The brand clearly has staying power in the mid-price sneaker market, which is largely ignored by other athletic apparel companies. The domestic business is stable, while the international business is red hot. In sum, this is a growth company with staying power and high margins in a growth industry. Those are attractive features to a potential suitor. Skechers stock also has ideal characteristics for a buyout target. There's a lot of cash and short-term investments on the balance sheet (~$900 million), and hardly any debt (less than $70 million in long-term debt). Thus, the company has a net cash position of roughly $800 million, meaning the $4.2 billion market cap underlying Skechers stock translates into a $3.4 billion enterprise value. Sales over the past twelve months measure $4.5 billion, while EBITDA is around $520 million. Thus, Skechers stock is trading at roughly 0.7X EV/Sales and ~6.4X EV/EBITDA. Those are anemic multiples for a double-digit-growth company. A potential suitor could pay a huge premium for Skechers stock, and still only pay just over 1X EV/Sales. Overall, Skechers the company has buyout target written all over it. So does Skechers stock. As such, while VFC may not be the buyer, that doesn't mean the idea itself is off the table in 2019. ### Bottom Line on SKX Stock Skechers is a solid and stable growth company with a dramatically undervalued stock. That combination naturally attracts M&A interest. If Skechers stock remains this cheap for much longer, there will eventually be a takeout offer -- and likely at a huge premium. As of this writing, Luke Lango was long SKX and NKE. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Apple Should Consider Buying * 7 Beaten-Up Housing Stocks Due for a Bounce Back * Take Buffett's Advice: 5 Vanguard Funds to Buy Compare Brokers The post Potential Buyout Is Another Reason to Like Skechers Stock appeared first on InvestorPlace.
Analysts See More Upside in LULU after Its Strong Holiday RunAnalyst activity on LULUOn January 17, UBS raised its price target for Lululemon (LULU) stock to $148 from $135. Several analysts see further upside potential in Lululemon stock after the
If anything has become clear over the past two decades, it is that Nike (NYSE:NKE) is a long term winner. While other fashion brands have come and gone with often fickle fashion trends - think Abercrombie & Fitch (NYSE:ANF), Under Armour (NYSE:UAA), Fossil (NASDAQ:FOSL), or L Brands (NYSE:LB) Victoria's Secret - Nike simply hasn't. Nike stock has remained almost fad-proof. For over two decades now, the company has stood firmly atop the secular growth athletic apparel market, and that has powered Nike stock to consistent gains in a long term window. This will remain true for the foreseeable future for several reasons. Above all else, Nike is innovating way faster than all of its peers, leveraging technology to optimize its product creation strategy, and is bringing new, fresh, and exciting products to market with unprecedented pace. InvestorPlace - Stock Market News, Stock Advice & Trading Tips All of those things boost Nike brand among both professionals and amateurs alike, and maintain Nike as the premiere athletic apparel brand in the world. * 7 Stocks to Buy as the Dollar Weakens Those initiatives will also keep Nike on a winning path for a lot longer. Every now and then, NKE gets slightly undervalued. See mid-2017. It also gets slightly overvalued from time to time. See mid-2018. Ultimately, those are just opportunities to add and trim. At the end of the day, Nike has risen a whopping 560% over the past ten years. Investors have every reason to believe a similar rally will unfold over the next ten years. Thus, NKE is a long term buy-and-hold. Trim on big rallies. Add on big dips. But ultimately stick with NKE stock for the long haul. ### Nike's Innovation Is Firing on All Cylinders If there's one thing that is most important in the apparel market, it is innovation. If you innovate better and more quickly than anyone else, then you will consistently bring better and more exciting products to market. Better and more exciting products boost brand awareness and image. Boosted brand awareness and image attracts professionals and amateurs to your brand. Revenues go up, so you have more money to spend on professional endorsements, which in turn attracts more amateurs, who bring in more money. It's a positive feedback loop that all starts with innovation. Over the past two decades, Nike's innovation in the athletic apparel market has been unprecedented. This arguably remains more true today than it has even been before. Case 1: Nike Adapt BB. Nike just launched its first ever self-lacing smart basketball shoe. It's a smart shoe which is controlled by and connected to a smart device, and tightens or loosens based on user preference. Think real world Back to the Future applied to basketball shoes. Most other athletic apparel companies have yet to launch a self lacing shoe. Nike is applying this technology to performance shoes. Clearly, Nike is way ahead of the curve on self lacing technology. Regardless of if this footwear style becomes the norm or not, Nike's innovation advantage here illustrates just how forward-thinking this company is. Case 2: Nike's Consumer Direct Sciences team. Nike recently expanded its partnership with big data and AI firm Gridsum (NASDAQ:GSUM) to enhance Nike's data driven marketing and sales approach in China. This deal simply shows that Nike is much more than an athletic apparel company. They are a technology company that leverages big data analytics to influence and optimize product creation, assortment, and distribution. Overall, it is clear that Nike is innovating where no one else is the athletic apparel space is innovating. Such innovation has powered huge gains and unprecedented stability in Nike stock over the past twenty years. It will continue to do so over the next twenty years, too. ### Nike Stock Will Remain a Winner Here are the characteristics which have defined NKE over the past five years: * Mid to high single digit annualized revenue growth. * Stable operating margins in the low teens range. * Forward P/E multiple around 25. Those characteristics have been good enough to lead to Nike stock more than doubling over the past five years. In comparison, here are the characteristics which should define Nike stock over the next five years, given the company's innovation and leadership position in a secular growth athletic apparel market: * Mid to high single digit annualized revenue growth. * Slight operating margin expansion due to more premium product assortments. * Forward P/E multiple around 30. Essentially, revenue growth should be the same, and higher earnings growth potential through a more positive outlook on margins is compensated for in a higher forward P/E multiple. Thus, Nike stock is supported by largely the same characteristics today as it has been over the past five years, a stretch in which Nike stock doubled. In this light, Nike stock looks ready to double again over the next five years. ### Bottom Line on NKE Stock Given the company's unprecedented innovation, long history of market leadership, and track record of operational excellence, Nike stock is a long term winner. Dips are merely opportunities to add. Rallies are opportunities to sell. In the long run, this stock will trend significantly higher. As of this writing, Luke Lango was long NKE, FOSL, and LB. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Growth Stocks With the Future Written All Over Them * 7 Reasons Why Buffett's Bet on Apple Stock Is a Good One * 10 Companies That Could Post Decelerating Profits Compare Brokers The post Innovation Will Keep Nike Stock on a Winning Path appeared first on InvestorPlace.
Analyzing Nike’s Growth Prospects in 2019(Continued from Prior Part)Analysts recommend a “buy”As of January 14, among the 37 analysts covering Nike (NKE) stock, 68% recommend a “buy,” 30% recommend a “hold,” and 2% recommend a
Nothing much looks like it can stop Lululemon (NASDAQ:LULU) now. In fact, business is going so well for the Vancouver-based athleisure brand that it upped its top- and bottom-line guidance January 14, prompting several analysts to raise their target price for LULU stock. That's excellent news if you're a shareholder. Nike (NYSE:NKE) recently introduced its line of yoga wear in an attempt to capture some of Lululemon's action. Not only is Nike introducing its first yoga line (what took so long?), it's also providing free yoga workout regimens -- anywhere from 15 minutes to 45 minutes -- through the company's Nike+ Training Club app. InvestorPlace - Stock Market News, Stock Advice & Trading Tips "These new workouts are really powerful because they offer the chance to practice no matter what your goal is or where you are on your yoga journey," Nike Master Trainer and yogi Leah Kim said about the workouts. "With the varying workout focus areas, lengths and poses, there is something for everyone -- from the beginner yogi looking to improve their practice to those who are more advanced." * 7 Oversold Small-Cap Stocks With Massive Profit Growth I've covered LULU stock for a long time. The one constant from detractors has always been that Nike and Under Armour (NYSE:UAA) would someday awaken to the fact that Lululemon is for real and put some effort into stealing some of its thunder. ### Has That Day Arrived? Not by a longshot. Yes, Nike is a much bigger company than Lululemon. In the last 12 months, Nike had $38 billion in revenue on a global basis, almost 13 times Lululemon's. But Nike is very late to the yoga party. It can't even hold a candle to Athleta, Gap's (NYSE:GPS) yoga-inspired brand, and that says all you need to know about the level of concern LULU CEO Calvin McDonald has for his much bigger rival. The reality is that Nike should have acted 2-3 years ago if it genuinely wanted to own this segment of the athleisure-apparel industry. So the question isn't whether Nike or Under Armour can steal LULU's thunder; the question is how big can Lululemon get? I'd say pretty darn big. ### Lululemon Has Barely Scratched the Surface If you follow Lululemon stock, you might be aware of the company's goal to hit $4 billion in revenue by the end of 2020. Given the company's latest guidance revision, I'd say there's a good chance for the company to hit the self-imposed target before the end of next year. Two things stand out from its latest guidance. First, it was expecting Q4 2018 same-store sales to hit low double-digit growth in the best-case scenario, with overall revenue of $1.13 billion at the top end of its previous forecast. Now, it expects Q4 2018 same-store sales growth to possibly hit high double-digits with revenues as high as $1.15 billion. That's $200 million in additional revenue. And remember, there are still two weeks left in the fiscal year and quarter. It's possible consumers could do more damage to their credit cards between now and then. Unlikely, but you never know. On the bottom line, which is what truly drives share prices, the company expects earnings per share of $1.72-$1.74, eight cents higher than the low-end of its previous guidance and seven cents higher on the top end. Cowen analyst John Kernan recently met with LULU CFO Patrick Guido and came away so impressed that he raised his price target by $3 to $188, providing 32% upside over the next 12 months. Considering the volatility of the markets over the final three months of 2018, it says a lot about Lululemon's current competitiveness. In fact, business has been so strong that the company could raise its 2020 targets when it announces fourth-quarter earnings in March. More likely, it will come up with a new five-year target -- I'd expect at least $6 billion -- and get to work to meet and exceed the new number. ### The Bottom Line on LULU Stock As McDonald said in the company's press release revising guidance, Lululemon had a very strong year. I expect it to have another strong year in 2019 and again in 2020. Investors continue to underestimate the company's desire to compete. It's important to remember that it continued to execute at a high level in 2018 despite the fact it didn't have a CEO for more than five months. That speaks to the dedication of the company's employees in the stores and at head office. * 10 Growth Stocks With the Future Written All Over Them The only thing that can stop Lululemon from ruling the world is a recession, and that's not likely until 2020. As apparel brands go, LULU is the one to own for the long haul. As of this writing Will Ashworth did not hold a position in any of the aforementioned securities. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * Top 10 Global Stock Ideas for 2019 From RBC Capital * 10 A-Rated Stocks the Smart Money Is Piling Into * 5 Best Bank ETFs for This Week's Earnings Avalanche Compare Brokers The post Can Anything Stop Lululemon From Ruling the World? appeared first on InvestorPlace.
The question when it comes to Nike (NYSE:NKE) is valuation. There's little argument that Nike's business is attractive, the concern is the price of NKE stock. * 12 2018 Winners That Will Be Big Ol' Losers in 2019 And price does matter here. In 2015, the earnings multiple assigned to Nike stock reached the mid-20s. NKE spent the next two years trading basically flat before rallying in 2018. At a current price of $77, investors again are paying about 25 times forward earnings. That seems too dear a price, even for this business. I made a similar argument about six months ago -- and, since then, Nike stock basically is flat. That's not a bad performance, actually -- broad markets are down over that stretch -- but it leaves NKE stock in a similar position to where it stood in July, and in late 2015. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Again, the business is attractive. But if the stock is going to rise from here, outside factors will need to cooperate as well. And, in this market, I'm not sure I expect that outside help -- or believe that NKE is the play if it comes. ### Footwear Still Drives Nike Stock When NKE neared its lows late last year, one big issue was that demand in the footwear category seemed to be slowing. In the first quarter of fiscal year 2018 (the three months ending August 31, 2017), for instance, total Nike revenue actually was flat year over year. U.S. sales declined. And that wasn't just a Nike problem. Rather, it seemed like the demand for high-end sneakers, in particular (a hot trend for years), was starting to fade. Weakness at Under Armour (NYSE:UA,UAA) and even adidas AG (OTCMKTS:ADDYY) showed that Nike wasn't alone in seeing revenue growth slow. Since then, results have improved essentially every single quarter, including a strong Q2 FY19 report. Easy comparisons have helped somewhat the last two quarters -- but Nike's execution gets some of the credit as well. That said, so does the category. Results from rivals show that footwear demand overall has rebounded. The same is true of customers. Foot Locker (NYSE:FL) has posted better numbers and so have other retailers like Shoe Carnival (NASDAQ:SCVL) and DSW (NYSE:DSW). The sneaker trend seems to be back. The question for NKE stock is what happens if and when it fades again. As we saw last year, even a market leader can't drive growth if the category on the whole slows down. And either fashion changes or a weakening economy could again lead footwear demand to slow. That almost certainly would be bad news for NKE. ### The China Story for NKE Stock Nike needs some help from the Chinese economy as well. Nike's performance in China is becoming a larger part of the story behind NKE stock. Revenue in Greater China rose 31% on a constant-currency basis in Q2, accelerating from 20% growth in Q1. The market has driven over 15% of total Nike sales in the first half -- and is responsible for over one-third of this year's total revenue growth. Does that strength hold? The rising popularity of basketball in China and the growing middle class both suggest the market could be enormous for Nike, with years of growth ahead. But there also are at least near-term concerns about the impact of the trade war and an apparently slowing Chinese economy. We've seen both Starbucks (NASDAQ:SBUX) and particularly Apple (NASDAQ:AAPL) get dinged by exposure to that market. There's a risk for Nike, too. Second-half growth, as comparisons get tougher, is going to depend at least in part on strong results from China. If the trade war has any effect, that could color even the long-term story for NKE. ### Better Options Elsewhere? None of this is to suggest that Nike stock is a short -- or even necessarily a sell. But the stock does need at least some cooperation from external factors -- at a time when investors are notably more worried about those factors. And where the case for NKE weakens is in the idea that there are better investment opportunities out there beyond paying mid-20s earnings multiples for NKE. There's no shortage of cheaper plays on China growth, both direct in-country providers and stocks like AAPL. A macro downturn would hit Nike stock hard: the stock slipped 20% just between early October and mid-December on basically no news. I'd rather take that cyclical risk with stocks that haven't yet recovered to the same extent (here, too, there are myriad options, particularly in semiconductors and housing). Has Nike peaked? Probably not. Is NKE stock going to rise longer-term? Probably; it's been a hugely impressive investment over time. But it's tough to make a compelling case for paying 25x next year's earnings for a stock that does have some external risks. * 7 Reasons Why Buffett's Bet on Apple Stock Is a Good One Investors willing to take those risks can find much cheaper options elsewhere. Even if those risks don't materialize, and NKE stock rises, it seems like other stocks could, and will, do much, much better. As of this writing, Vince Martin has no positions in any securities mentioned. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * Top 10 Global Stock Ideas for 2019 From RBC Capital * 10 A-Rated Stocks the Smart Money Is Piling Into * 5 Best Bank ETFs for This Week's Earnings Avalanche Compare Brokers The post Nike Stock Still Needs a Lot of Outside Help appeared first on InvestorPlace.
Analyzing Nike’s Growth Prospects in 2019(Continued from Prior Part)Forward PE ratiosOn January 14, Nike’s (NKE) 12-month forward PE ratio was 25.8x.Under Armour (UAA), Skechers (SKX), Columbia Sportswear (COLM), and Lululemon Athletica (LULU)
Analyzing Nike’s Growth Prospects in 2019(Continued from Prior Part)Nike’s margins For the first two quarters of 2018, Nike’s (NKE) gross margin expanded by 70 basis points to 44.0% due to higher full-price selling and improved margins for
VF Corporation: Analysts' Third-Quarter Expectations(Continued from Prior Part)Comparing the PE ratiosOn January 11, VF Corporation’s (VFC) 12-month forward PE ratio was 17.6x. All of the company’s peers are trading at lower forward PE ratios
VF Corporation: Analysts' Third-Quarter Expectations(Continued from Prior Part)EPS projections VF Corporation (VFC) is scheduled to report its results for the third quarter of fiscal 2019 on January 18. Analysts expect the adjusted EPS to be $1.10 in
VF Corporation: Analysts' Third-Quarter ExpectationsAnalysts’ projectionsWall Street analysts estimate that VF Corporation (VFC) will report revenues of $3.87 billion in the third quarter of fiscal 2019. The company is scheduled to announce its
# Under Armour Inc ### NYSE:UAA View full report here! ## Summary * Bearish sentiment is high * Economic output in this company's sector is expanding ## Bearish sentiment Short interest | Negative Short interest is extremely high for UAA with more than 20% of shares on loan. This means that investors who seek to profit from falling equity prices are currently targeting UAA. ## Money flow ETF/Index ownership | Neutral ETF activity is neutral. The net inflows of $11.16 billion over the last one-month into ETFs that hold UAA are not among the highest of the last year and have been slowing. ## Economic sentiment PMI by IHS Markit | Positive According to the latest IHS Markit Purchasing Managers' Index (PMI) data, output in the Consumer Goods sector is rising. The rate of growth is strong relative to the trend shown over the past year, and is accelerating. ## Credit worthiness Credit default swap CDS data is not available for this security. Please send all inquiries related to the report to firstname.lastname@example.org. Charts and report PDFs will only be available for 30 days after publishing. This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
Prestige Consumer's (PBH) unimpressive preliminary revenue numbers for the third quarter compels management to trim fiscal 2019 view.
Previously, Lululemon had guided for a range between $1.115 billion and $1.125 billion. Lululemon expects diluted earnings per share to be between $1.72 to $1.74, higher the the initially anticipated $1.64 to $1.67. Stifel isn't just pricing in the added earnings Lululemon now expects for the quarter, the firm is now even more positive on the future.
Shares of Lululemon (LULU) soared as high as 8% in morning trading Monday after the yoga apparel powerhouse raised its Q4 earnings and revenue guidance.
In the booming economy of 2018, consumer discretionary stocks were skyrocketing until they weren’t. Here is a brief rundown of the top 5 stocks in this sector.
Under Armour’s 2019 Growth Prospects (Continued from Prior Part) ## Forward PE multiples On January 10, Under Armour’s (UAA) 12-month forward PE ratio was 58.4x. It’s trading at a higher PE multiple than its peers. Nike (NKE), Columbia Sportswear (COLM), Skechers (SKX), and Gap (GPS) have PE ratios of ~26.0x, 20.1x, 12.5x, and 9.6x, respectively. ## EPS projections for Under Armour For 2018, Wall Street analysts expect Under Armour’s adjusted EPS to increase 15.8% YoY to $0.22. For 2018, Under Armour’s management forecast its adjusted EPS at $0.21–$0.22. Earlier, it guided for adjusted EPS of $0.19–$0.22. Increases in sales could offer support to the bottom line amid rising expenses. For 2018, Under Armour’s management expects the year-end inventory to be down in a mid-single-digit rate. Also, driven by restructuring measures undertaken in 2017 and 2018, Under Armour projects annual savings of $200 million from 2019 to 2023. For 2019, analysts expect the company’s adjusted EPS to rise 50% YoY to $0.33. ## A look at EPS projections for peers Analysts expect Nike’s adjusted EPS to rise 10.5% YoY to $2.64 in fiscal 2019. For fiscal 2020, its EPS are expected to increase by 18.6% YoY to $3.13. For Columbia Sportswear, analysts’ adjusted EPS growth estimate for fiscal 2018 stands at 21.5% to $3.62. For fiscal 2019, its EPS are forecast to rise 12.4% to $4.07. For fiscal 2018, Wall Street projects that Skechers’ adjusted EPS will increase 3.8% to $1.85. For fiscal 2019, its EPS are expected to rise 8.0% to $1.99. For Gap’s fiscal 2018, analysts project EPS to be up 20.2% to $2.56, and for fiscal 2019, EPS is forecast to increase 3.5% to $2.65. Browse this series on Market Realist: * Part 1 - What to Expect from Under Armour’s 2019 Revenue Growth * Part 2 - Will Under Armour’s Margin and Bottom Line Impress in 2019? * Part 3 - What Wall Street Analysts Are Saying for Under Armour
Why Lululemon Stock Is Rising Today ## Stock rises on improved outlook Lululemon Athletica (LULU) stock was up over 3.0% in pre-market trading today after the company raised its guidance for the fourth quarter of fiscal 2018, which ends on February 3, 2019. The stock was up over 5.0% as of 9:52 AM EST today. The athletic apparel company now expects its fourth-quarter revenue in the range of $1.14 billion to $1.15 billion compared to the previous outlook range of $1.115 billion to $1.125 billion. Lululemon expects its comparable sales (on a constant currency basis) to grow in the mid-to-high teens range in fiscal 2018 compared to the previously issued forecast of high-single to low-double-digit growth. The updated guidance reflects the company’s strong performance in the holiday season, which is a crucial sales period for retailers. Lululemon expects its fourth-quarter adjusted EPS in the $1.72 to $1.74 range. The company had earlier forecasted EPS of $1.64 to $1.67 for the fourth quarter of fiscal 2018. ## Upbeat performance Lululemon had announced strong results for the fiscal 2018 third quarter after financial markets closed on December 6. The company’s net revenue grew 20.8% to $747.7 million, and adjusted EPS increased 33.9% to $0.75 in the fiscal 2018 third quarter. However, despite the upbeat performance, Lululemon stock declined 13.4% on December 7, as investors were disappointed with the fourth-quarter outlook. Overall, Lululemon stock was up by an impressive 54.7% in 2018 compared to the 18.5% rise in Nike (NKE) and 22.5% growth in Under Armour (UAA) stocks. Lululemon’s focus on innovation, robust online sales, and initiatives to drive its men’s business are helping the company deliver strong results. Unlike Lululemon, retailers like JCPenney (JCP) and Macy’s (M) struggled to deliver strong holiday sales numbers, as competition in the retail space has intensified with the growth of online retailers.
Clothing chain Lululemon Athletica Inc raised its profit and revenue forecasts for the last quarter of 2018 on Monday, building on signs that strong growth online and in China is improving overall results. The forecast comes about a month after the company reported a surge in online traffic in the third quarter and registered a 76 percent jump in its e-commerce business in China. Chief Executive Officer Calvin McDonald, who has upped investment in China and in December identified Asia as a key growth driver, said the outlook revisions reflected "success around the globe".
Under Armour’s 2019 Growth Prospects (Continued from Prior Part) ## On the sidelines As of January 10, of the 33 analysts covering Under Armour (UAA) stock, 18% recommend a “buy” and another 27% gave it a “sell” rating. The majority—55%—of analysts have retained their “hold” rating for Under Armour stock. Under Armour is working on expanding its international business and developing its direct-to-customer business to drive its top-line growth. However, Under Armour has stated that the North America segment’s performance would be muted. This segment contributes a major chunk of overall sales. Under Armour’s stock gained 22.5% in 2018. As of January 10, the stock has gained 8.7%. It last closed trading at $19.20. In January so far, we’ve seen two price target changes for Under Armour. On January 2, Wells Fargo slashed its price target to $20.00 from $23.00. On January 7, UBS lowered the price target to $20.00 from $24.00. At present, analysts’ 12-month average price target for Under Armour’s stock is $20.41, which reflects 6.3% upside to the stock’s price on January 10. ## Ratings for peers For Nike (NKE), out of the 37 analysts covering Nike stock, ~68% have a “buy” rating. Another 30% have rated the stock a “hold.” On January 9, HSBC upgraded Nike (NKE) to “buy” from “hold” and raised its target price to $95.00 from $92.00. However, Baird cut its rating for Nike to “neutral” from “outperform.” Analysts’ 12-month average target price for NKE stock is $86.49, which reflects a 13.2% upside based on its January 10 stock price. Of the 16 analysts covering Columbia Sportswear (COLM), 50% gave it a “buy” rating while the remainder rated it a “hold.” Columbia Sportswear’s mean target price is $101.40, indicating a 23.9% upside. 50% of the 14 analysts covering Skechers’ (SKX) stock have provided a “buy” rating, and the rest rated it a “hold.” On January 2, Wells Fargo lowered its price target for SKX to $26.00 from $30.00. On January 7, UBS also lowered its price target to $32.00 from $35.00. Skechers’ 12-month average target price is $31.92, indicating a 28.2% upside. Continue to Next Part Browse this series on Market Realist: * Part 1 - What to Expect from Under Armour’s 2019 Revenue Growth * Part 2 - Will Under Armour’s Margin and Bottom Line Impress in 2019? * Part 4 - Under Armour’s Price-to-Earnings versus Peers’
Under Armour’s 2019 Growth Prospects (Continued from Prior Part) ## Margins For the first three quarters of 2018, Under Armour’s (UAA) gross margin contracted by 70 basis points to 45.1%, due mainly to an unfavorable channel mix. However, fewer promotions and improvement in product costs offered some cushioning to the gross margin. However, selling, general, and administrative (SG&A) expenses have risen in 2018. For the first three quarters, SG&A expenses rose 6.0% year-over-year or YoY to $1.59 billion. Though marketing costs decreased 3%, other costs increased 9.4%. The spurt in expenses was driven by increases in incentive compensation and investments in the expansion of direct-to-consumer and international operations. The SG&A expense rate as a percentage of sales increased by 30 basis points to 41.9%. Due to higher expenses and restructuring charges, the company reported operating loss of $14.6 million versus operating profit of $64.9 million for the first nine months of 2017. For 2018, Under Armour expects its adjusted operating income at $160 million–$165 million. ## EPS numbers As a result, Under Armour’s EPS for the first three quarters of 2018 were -$0.11, compared with EPS of $0.09 for the first three quarters of 2017. Higher expenses, coupled with reduced operating income, dented the bottom-line performance in 2018. For the fourth quarter, analysts expect Under Armour to report adjusted EPS of $0.04, marking an improvement over the breakeven earnings reported in the fourth quarter of 2017. For 2018, analysts expect Under Armour to report adjusted EPS of $0.22, reflecting increases of 15.8% YoY. Under Armour management expects adjusted EPS for fiscal 2018 at $0.21–$0.22. For 2019, management projects EPS of $0.31–$0.33. ## Vision 2023 For 2023, Under Armour has forecast EPS growth of a five-year CAGR of ~40%. The gross margin is likely to rise by 275–300 basis points to at least 48.0% by 2023. The company’s operating margin is projected at a low double-digit percentage. Under Armour expects a return of 20% on capital invested while its annual cash flow from operations is estimated at $700 million by 2023. Continue to Next Part Browse this series on Market Realist: * Part 1 - What to Expect from Under Armour’s 2019 Revenue Growth * Part 3 - What Wall Street Analysts Are Saying for Under Armour * Part 4 - Under Armour’s Price-to-Earnings versus Peers’