Opinions
Larry Berman CFA, CMT, CTA
Under Armour
UA-N
DON'T BUY
May 11, 2015
$78.260
Stock price when the opinion was issued
Consumer Products
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Stockchase Research Editor: Michael O'Reilly
Analysts were disappointed with recent earnings falling below expectations and the market has given the stock a haircut, but we think the worst is over. High inventory showed demand was not as aggressive as thought. A new CEO is leveraging their online digital expertise to expand sales going forward. Cash reserves are stable, while they buy back shares. It trades at 18x earnings and 2x book value. We recommend a stop-loss at $6, looking to achieve $11 -- upside potential over 45%. Yield 0%
(Analysts’ price target is $26.20)
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You can’t look at the multiple, but rather should look at the peg ratio, which is over 3, so you are paying a lot. When or if they start to disappoint, which they are not currently, this can cut in half in 6 months and you have to consider that. Use tight stops. It could keep going for a couple of years before going down.