|Bid||8.67 x 4000|
|Ask||0.00 x 1000|
|Day's Range||8.66 - 9.00|
|52 Week Range||6.37 - 24.55|
|Beta (5Y Monthly)||1.19|
|PE Ratio (TTM)||N/A|
|Earnings Date||Apr 25, 2018 - Apr 30, 2018|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||13.50|
Is it bye-bye to Macy's if a COVID-19 second wave happens?
This past weekend, athletic apparel company Under Armour (NYSE: UA) (NYSE: UAA) informed collegiate sports powerhouse UCLA that it wanted out the 15-year, $280 million sponsorship deal it signed in 2016. Under Armour didn't specify if the "extended period of time" in question was solely due to coronavirus-related cancellations or if it had more to do with UCLA's somewhat diminished reputation of late as a sports powerhouse. It wouldn't be naive of investors to wonder, however, if the proposed end to the largest collegiate athletics sponsorship deal on record actually points to a much bigger fiscal problem for the company.
In this episode of MarketFoolery, Chris Hill chats with the Fool's Maria Gallagher about the latest headlines from Wall Street. They've got some news from social media and talk about two partnerships in the athletic and fashion apparel industry and much more.
Under Armour underscored the challenges facing the US college sports industry as it moved to end outfitting deals with two leading university programmes worth hundreds of millions of dollars. The arrangements with the University of California, Los Angeles, and the University of California, Berkeley, were part of a marketing push by Under Armour in recent years to provide colleges with a mixture of cash and product in return for the right to outfit their sports teams. Under Armour’s arrangement with UCLA was touted as “the largest apparel deal in the history” of US college sports at the time it was signed in 2016, at a reported $280m over 15 years.
Under Armour (NYSE:UA, NYSE:UAA) offers very little to talk about on the positive side these days. Its first quarter earnings were deep in the red and the outlook for its performance apparel is not any better. I am skeptical of the recent rise of UA stock off of its lows. I suspect there may be another opportunity to buy the stock below current prices.Source: AuKirk / Shutterstock.com For example, UA stock added 16%, or $1.28 per share, from its $8.00 a share price on May 11, when the company produced its disheartening Q1 earnings. It's pared back some of that gain as this week draws to a close.The problem, though, is that the company burnt through $392 million in free cash flow (FCF) during Q1. And if that continues in Q2 and Q3, the company may become dangerously low in liquidity.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Liquidity and Book Value Issues With UA StockAs of March 31, Under Armour had just $959 million in cash. Now, it recently raised another $460 million or so in a convertible note, so its total liquidity is about $1.41 billion. But if it burns through $400 million over the next two quarters, the balance would fall to $600 million or so.At that point, the company would likely have to raise permanent equity and/or a mixture of equity and debt. Right now the company's tangible book value per share (TBVPS) is just $1.02 billion, or $2.26 per share, according to data compiled by Seeking Alpha.So, here is the problem: By the end of Q3, with another $800 million in FCF loses, the tangible book value will fall to $224 million or so, and the TBVPS will be just 49 cents per share. If that's the case, there is no way that UA stock would still be trading at $9.28 per share, where it was earlier this week.For example, if the company raised another $400 million to try and survive through the end of the year, the dilution would be very high. That would temporarily raise TBVPS to 69 cents per share if the shares were sold at $4.00. But this would leave 900 million shares outstanding and book value at $624 million. * 10 Robotics Stocks on the Technological Cutting Edge But if Under Armour produces a consecutive third quarter of $400-million FCF losses, tangible book value will fall to $224 million. With 900 million shares outstanding, TBVPS drops to just 25 cents per share. UA stock would fall to less than $1.00 per share by then. What Needs to Happen With Under ArmourIf Under Armour management was really smart, they would raise the equity and debt they need now to prove to analysts that they can outlast a recession. That is essentially what the airline companies are all doing.As a result, any perceived increase in sales or demand helps push up the stock, since everyone knows that the company can outlast a liquidity crisis.Moreover, the company needs to be producing monthly, if not bi-weekly, sales figures to show that it is past an inflection point. The company desperately needs to get above net income breakeven on a cash basis. If they don't project getting there by the end of Q3, they need to immediately shut down a good number of their outlets and stores.Fortunately, the company has cut expenses and capital outlay expenditures that will lower its FCF burn. But I have seen retail companies like this live on hope and not reality. The company needs to overcut its expenses, leases and other outlays. Then it can show that cash burn will drop. What to do With UA StockInvestors in this name need to be realistic. The company will likely report deep losses in Q2. If management does not take action to drastically cut costs and get to breakeven by the end of Q3, you should run. At that point, UA stock will not stay where it is today.To be honest, UA stock is not worth any more than 1x TBVPS, and maybe even less than that. Even being optimistic, at 2x TBVPS US stock is not worth more than $5.00 per share.That represents a potential drop of $4.28 per share from today's price or a loss of 43%. Keep away from UA stock until a more reasonable margin of safety is apparent.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide, which you can review here. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * Top Stock Picker Reveals His Next 1,000% Winner * The 1 Stock All Retirees Must Own * Look What America's Richest Family Is Investing in Now The post Under Armour's Outlook Is Murky and on a Closer Look, UA Stock Is Expensive appeared first on InvestorPlace.
Raymond James analyst Matthew McClintock reiterated an Outperform rating on the sneaker company while raising his target for the stock price by $15, to $115.
There has been a good reason for Under Armour's underperformance. Under Armour posted quarterly EPS of -$0.34 on revenue of $930.24 million. Last November, it was reported across the financial media that Under Armour was under investigation for its accounting practices.
Negative news from the Federal Reserve and Johns Hopkins University shook confidence in stocks of all stripes Thursday. As of 1:15 p.m. EDT today, American Eagle stock is down 6.5%, Foot Locker 8.1%, and Under Armour 8.3%.
Many retail stocks have rebounded from March lows, but there are still plenty of unresolved questions about the coronavirus. And that means some of those gains might be at risk, Robert W. Baird is warning.
Under Armour's mask sells for $30 and features 'a unique, three-layer model engineered for athletes during performance,' the company says.
While the pandemic was a big drag on the apparel company's first-quarter performance, it still has an uphill climb to overcome its long-standing issues.
The coronavirus pandemic caused stores across the country to close, and many of them are unlikely to reopen. Ultimately that is a good thing for retail.
Diamond Hill Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Diamond Hill Small Cap Fund posted a return of -36.17% for the quarter, underperforming its benchmark, the Russell 2000 Index which returned -30.61% in the same quarter. You should check out Diamond Hill Capital's top 5 […]
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Shares of Under Armour (NYSE: UA) (NYSE: UAA) were rising today following a positive jobs report last week, indicating that the U.S. economy could slowly be coming back to life -- and consumer spending along with it. Under Armour's stock had climbed as high as 7.2% in the morning. While the unemployment rate is still astronomically high, investors are looking for any positive news that they can find, and Friday's report was enough to create a little optimism that consumers may venture out of their homes soon and begin spending again.