Under Armour (NYSE:UA), a developer and distributor of athletic apparel, footwear, and accessories, is scheduled to report its Q4 2014 results on February 4.
It has recorded over 20% top line growth during the last 18 quarters. We believe the company will be able to continue its growth momentum in the fourth quarter, as it is still scratching the surface of its various growth drivers, including the women’s, international, direct-to-consumer, and footwear businesses.
Our profitability outlook for the third quarter is also positive as we think the operating margin could rise on an annual basis due to lower input costs in Q4, resulting from low oil prices, a downward trend in cotton prices, and a strong inventory position.
Recap of Q3 2014 Results
Under Armour posted another very strong quarter in Q3 2014 with a 30% net revenue growth to $938 million. The company maintained its solid growth momentum as it reached an 18th consecutive quarter of an over 20% increase and a 4th consecutive quarter of over a 30% increase in its top line. We believe the company will continue to show strong growth in the future as consumers continue to respond to the strength of its brand and as the company’s efforts to lure in women customers are successful.
Gross margins improved by 120 basis points to 49.6% in Q3 2014. The expansion in margin was driven by the favorable comparison to last year’s margin, which was suppressed due to high import cost duties, and a favorable year-over-year sales mix. Selling, general, and administrative expenses as a percentage of net revenues, increased by 230 basis points to 34% in the third quarter of 2014, as the company’s expenses related to marketing, supply chain enhancements, and selling costs, rose over the quarter. Following these results, the company has raised its revenue guidance for 2014 to net revenues of $3.03 billion, representing growth of 30%.
Various Growth Drivers Could Help the Company Maintain its Growth Momentum
MDC says, Under Armour is poised for continued strong growth in the future, owing to its key growth strategies of expanding the women’s line, footwear, international, and direct-to-consumer businesses.
MDC will predict a $74.65+ possible closing price after the bell on Wednesday.
Source: the above financial comments are opinions by MDC. MDC encourages everyone to seek proper financial guidance before investing. #underarmour $UA