Breaking Down Under Armour, Inc. (UA) Financial Health: Key Insights for Investors

Are you keeping a close watch on Under Armour's (UA) financial performance? As investors, it's crucial to stay informed about the factors shaping the company's financial health. In fiscal year 2024, the sportswear brand faced a challenging retail environment, reflected in a 3% revenue decrease, bringing the total to $5.7 billion. Despite these headwinds, Under Armour maintained a strong balance sheet, ending the year with a solid cash position and healthy inventory levels. But how did this impact their profitability, and what strategic moves are they making to strengthen their position? Dive in to uncover key insights into Under Armour's financial status and future outlook.

Under Armour, Inc. (UA) Revenue Analysis

A detailed examination of Under Armour, Inc.'s (UA) revenue streams is crucial for investors seeking to understand the company's financial health and growth potential. This analysis breaks down the primary sources of revenue, assesses year-over-year growth, and identifies key trends and shifts in the company's business segments. Understanding these factors provides a comprehensive view of how Under Armour, Inc. (UA) generates its income and where future opportunities and challenges may lie. For insights into the company's foundational principles, refer to the Mission Statement, Vision, & Core Values of Under Armour, Inc. (UA).

Under Armour, Inc.'s (UA) revenue is primarily derived from the following sources:

• Apparel: This segment includes performance apparel, sportswear, and licensed apparel.
• Footwear: This covers performance footwear for various sports, outdoor activities, and lifestyle footwear.
• Accessories: This segment includes hats, bags, gloves, and other sports-related accessories.
• Licensing: Revenue generated from licensing the Under Armour, Inc. (UA) brand for use on various products.
• Other: Includes connected fitness subscriptions and other miscellaneous revenue streams.

Analyzing the year-over-year revenue growth rate provides insights into Under Armour, Inc.'s (UA) performance and its ability to expand its market presence. Here's a look at recent revenue trends:

In the fiscal year 2024, Under Armour, Inc. (UA) reported a revenue of $5.7 billion, which was down 3% compared to 2023. The wholesale revenue decreased 4% to $3.3 billion, and direct-to-consumer revenue was flat at $2.4 billion, with a 1% increase in owned and operated stores and a 2% decrease in e-commerce. North America revenue decreased 6%, while international revenue increased 1%, with a 13% increase in EMEA and a 4% decrease in Asia Pacific.

The contribution of different business segments to Under Armour, Inc.'s (UA) overall revenue provides a clearer picture of the company’s strengths and weaknesses. Here’s an approximate breakdown based on available information:

• Apparel: Typically the largest segment, contributing around 65-70% of total revenue.
• Footwear: The second-largest segment, accounting for approximately 20-25% of revenue.
• Accessories: A smaller but significant segment, contributing about 10-15% of revenue.

Significant changes in revenue streams can indicate strategic shifts or market impacts. For Under Armour, Inc. (UA), these changes might include:

• Direct-to-Consumer (DTC) Growth: Increased focus on DTC channels, including e-commerce and owned retail stores, to improve margins and brand control.
• International Expansion: Strategic efforts to expand into international markets, particularly in Asia and Europe, to diversify revenue streams.
• Product Innovation: Introduction of new product lines and technologies to drive sales and maintain a competitive edge.

To further illustrate Under Armour, Inc.'s (UA) financial performance, consider the following summary of key financial data:

Under Armour, Inc. (UA) Profitability Metrics

Analyzing Under Armour, Inc. (UA)'s profitability involves scrutinizing its gross profit, operating profit, and net profit margins to understand its financial health and operational efficiency. A comprehensive review of these metrics, alongside comparisons with industry benchmarks and historical trends, offers valuable insights for investors and stakeholders.

Here's what we'll explore:

• Gross Profit, Operating Profit, and Net Profit Margins: Understanding how each margin contributes to Under Armour, Inc. (UA)'s overall profitability.
• Trends in Profitability Over Time: Examining historical data to identify patterns and potential areas of improvement or concern.
• Comparison of Profitability Ratios with Industry Averages: Benchmarking Under Armour, Inc. (UA)'s performance against its competitors.
• Analysis of Operational Efficiency: Evaluating how effectively Under Armour, Inc. (UA) manages its costs and maximizes its gross margin.

Under Armour, Inc. (UA) reported a gross profit of $2.7 billion for the fiscal year 2024, representing a gross margin of 49.7%. This indicates the company's efficiency in managing its cost of goods sold relative to its revenue. The increase in gross margin was primarily driven by disciplined pricing and promotional strategies, along with supply chain efficiencies.

However, operating income for fiscal year 2024 was $0.4 billion, which translates to an operating margin of approximately 7.3%. This is calculated after accounting for selling, general, and administrative expenses. The operating margin reflects the profitability of Under Armour, Inc. (UA)'s core business operations, excluding interest and taxes.

Net income for the same period stood at $0.3 billion, resulting in a net profit margin of about 5.5%. This figure represents the final profit available to shareholders after all expenses, interest, and taxes have been considered. Fluctuations in net income can be influenced by various factors, including tax rates, interest expenses, and one-time gains or losses.

To provide a clearer picture of Under Armour, Inc. (UA)'s profitability, here’s a summary table:

When comparing Under Armour, Inc. (UA)'s profitability ratios with industry averages, it's essential to consider its specific market segments and competitive landscape. Industry averages can vary widely, but generally, a gross margin of around 50% is considered competitive in the apparel and footwear sector. However, to maintain and improve profitability, Under Armour, Inc. (UA) must focus on efficient cost management and strategic pricing.

Interested in learning more about Under Armour, Inc. (UA) investors? Check out this insightful article: Exploring Under Armour, Inc. (UA) Investor Profile: Who’s Buying and Why?

Under Armour, Inc. (UA) Debt vs. Equity Structure

Analyzing Under Armour, Inc. (UA)'s financial health involves a close look at its debt versus equity structure. This reveals how the company funds its operations and growth. Understanding the balance between debt and equity is crucial for investors assessing risk and potential returns. Here's a breakdown of key aspects:

As of the fiscal year 2024, Under Armour, Inc. (UA) reported the following regarding its debt levels:

• Long-term Debt: Under Armour's long-term debt stands at $778.5 million.
• Short-term Debt: The company holds a short-term debt of approximately $14.9 million.

The debt-to-equity ratio is a critical metric for evaluating Under Armour, Inc. (UA)'s financial leverage. As of 2024, the company’s debt-to-equity ratio can be calculated using the total liabilities and total equity. The total liabilities were reported at $1.89 billion, while the total equity was $2.43 billion. This results in a debt-to-equity ratio of approximately 0.78.

Industry standards vary, but a debt-to-equity ratio below 1.0 generally indicates a more conservative financing approach. Under Armour, Inc. (UA)'s ratio of 0.78 suggests a balanced approach to leveraging debt and equity.

Recent financial activities provide insights into Under Armour, Inc. (UA)'s debt management:

• Recent Debt Issuances: There is no evidence of significant debt issuances in 2024.
• Credit Ratings: Under Armour, Inc. (UA) holds a Standard & Poor's credit rating of BBB-, which is an investment-grade rating.
• Refinancing Activity: There were no major refinancing activities reported in the recent fiscal year.

Balancing debt financing and equity funding is vital for sustainable growth. Under Armour, Inc. (UA)'s strategy involves carefully managing its debt levels while maintaining a healthy equity base. This approach allows the company to invest in growth initiatives without overextending its financial resources.

For further insights into Under Armour, Inc. (UA)'s strategic direction, you might find this resource helpful: Mission Statement, Vision, & Core Values of Under Armour, Inc. (UA).

Under Armour, Inc. (UA) Liquidity and Solvency

Liquidity and solvency are crucial indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Under Armour, Inc. (UA), analyzing these metrics provides insights into its operational efficiency and financial stability.

Assessing Under Armour, Inc. (UA)'s Liquidity:

Analyzing Under Armour's liquidity involves examining key ratios and cash flow trends to gauge its ability to meet short-term obligations.

• Current and Quick Ratios: These ratios provide a snapshot of Under Armour's ability to cover its short-term liabilities with its current assets. The current ratio, calculated as current assets divided by current liabilities, indicates the company's overall liquidity position. The quick ratio, which excludes inventories from current assets, offers a more conservative measure of liquidity by focusing on the most liquid assets.
• Analysis of Working Capital Trends: Monitoring Under Armour's working capital, which is the difference between its current assets and current liabilities, reveals trends in its operational efficiency. A positive and increasing working capital balance suggests that the company is effectively managing its short-term assets and liabilities.
• Cash Flow Statements Overview: A review of Under Armour's cash flow statements provides insights into its cash generation and usage patterns. Examining cash flow from operating activities, investing activities, and financing activities helps assess the company's ability to generate cash from its core business operations, invest in growth opportunities, and manage its debt and equity financing.
• Potential Liquidity Concerns or Strengths: Identifying potential liquidity concerns or strengths is crucial for assessing Under Armour's financial health. Factors such as declining cash reserves, increasing debt levels, or weakening operating cash flow may signal potential liquidity risks. Conversely, strong cash generation, efficient working capital management, and access to credit facilities may indicate liquidity strengths.

Here's an overview of Under Armour's cash flow activities based on the 2024 fiscal year:

The cash flow statement for the fiscal year ending December 31, 2024, reveals that Under Armour generated $447.46 million in cash from operating activities. However, it used $121.45 million for investing activities and $217.39 million for financing activities. This resulted in a net increase of $107.33 million in cash, cash equivalents, and restricted cash.

For additional insights into Under Armour's values, see: Mission Statement, Vision, & Core Values of Under Armour, Inc. (UA).

Under Armour, Inc. (UA) Valuation Analysis

Determining whether Under Armour, Inc. (UA) is overvalued or undervalued requires analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, payout ratios (if applicable), and analyst consensus.

As of April 2024, Under Armour's stock performance and valuation metrics provide a mixed picture:

• P/E Ratio: The trailing twelve months (TTM) P/E ratio is 50.32, which is considered high, suggesting that the stock might be overvalued compared to its earnings.
• P/B Ratio: The Price to Book ratio is 2.47 as of May 09, 2024.
• EV/EBITDA Ratio: This metric is essential for understanding the overall value of the company relative to its earnings before interest, taxes, depreciation, and amortization. The most recent data needs to be considered to provide an accurate analysis.

Here’s a snapshot of Under Armour's recent stock performance:

• Stock Price Trends: As of April 2024, Under Armour's stock has shown some volatility. For instance, on May 13, 2024, the stock closed at $7.08. Monitoring these trends over the past 12 months helps to understand investor sentiment and potential growth trajectories.
• Dividend Yield and Payout Ratios: As of now, Under Armour does not offer a dividend. Therefore, dividend yield and payout ratios are not applicable.

Analyst consensus is also vital for valuation. According to recent analyst ratings:

• Analyst Ratings: As of April 2024, analysts have varying recommendations. For example, Telsey Advisory Group maintained its 'Market Perform' rating on May 17, 2024, with a price target of $8.00. Meanwhile, Williams Trading downgraded the stock to a 'Sell' rating with a price target of $6.00. These varied ratings suggest uncertainty among analysts regarding Under Armour's future performance.

To summarize, a comprehensive valuation assessment involves comparing these metrics against industry peers and historical data. Investors should consider these factors alongside Under Armour's growth prospects and overall financial health to make informed decisions. For more detailed insights, you can check out: Breaking Down Under Armour, Inc. (UA) Financial Health: Key Insights for Investors.

Under Armour, Inc. (UA) Risk Factors

Under Armour, Inc. (UA) faces a variety of risks that could significantly impact its financial health. These risks span internal operational challenges, external market pressures, and strategic execution hurdles.

External Risks:

• Industry Competition: The athletic apparel and footwear market is intensely competitive. Nike and Adidas, along with other major brands and smaller niche players, constantly vie for market share. Increased competition could lead to pricing pressures, reduced sales, and lower profitability for Under Armour.
• Changing Consumer Preferences: Consumer tastes and preferences in athletic wear can shift rapidly due to trends, endorsements, and technological innovations. Under Armour must accurately predict and respond to these changes to maintain its brand relevance and market position.
• Economic Conditions: Economic downturns can reduce consumer spending on discretionary items like athletic apparel, negatively affecting Under Armour’s sales and financial performance. Global economic uncertainty and regional recessions pose ongoing risks.
• Regulatory Changes: Changes in trade policies, tariffs, and regulations related to labor, manufacturing, and environmental standards can impact Under Armour's supply chain, production costs, and international sales.

Internal and Strategic Risks:

• Supply Chain Disruptions: Under Armour relies on a global supply chain for manufacturing its products. Disruptions caused by natural disasters, political instability, or other unforeseen events can lead to production delays, increased costs, and inventory shortages.
• Brand Image and Reputation: Maintaining a positive brand image is critical for Under Armour. Negative publicity related to product quality, ethical concerns, or controversies involving brand ambassadors can damage the company's reputation and affect sales.
• Inventory Management: Effective inventory management is essential to avoid excess stock or shortages. Poor forecasting and planning can result in markdowns, reduced margins, and lost sales opportunities.
• Information Technology Systems: Reliance on IT systems exposes Under Armour to cybersecurity threats, data breaches, and system failures. These incidents can disrupt operations, compromise sensitive data, and harm the company's reputation.

Mitigation Strategies:

While specific mitigation strategies are not always detailed in public filings, Under Armour likely employs various tactics to address these risks:

• Diversification of Supply Chain: Sourcing materials and manufacturing products from multiple regions to reduce dependence on any single location.
• Investment in Innovation: Continuously developing new products and technologies to stay ahead of consumer trends and maintain a competitive edge.
• Strengthening Cybersecurity: Implementing robust security measures to protect IT systems and data from cyber threats.
• Proactive Brand Management: Monitoring and addressing potential reputational risks through ethical sourcing, quality control, and responsible marketing practices.

Understanding these risks is crucial for investors assessing Under Armour's long-term financial health and potential.

Explore more about Under Armour, Inc. (UA) investor profile: Exploring Under Armour, Inc. (UA) Investor Profile: Who’s Buying and Why?

Under Armour, Inc. (UA) Growth Opportunities

Under Armour, Inc. (UA) faces a dynamic landscape of growth opportunities, driven by product innovation, strategic market expansions, and key partnerships. An analysis of these elements provides insight into the potential future trajectory of the company.

Key growth drivers for Under Armour, Inc. (UA) include:

• Product Innovations: Continued investment in innovative apparel, footwear, and accessories, incorporating advanced technologies to enhance performance and appeal to athletes.
• Market Expansions: Strategic expansion into emerging markets and underserved regions, leveraging digital platforms and localized marketing strategies.
• Acquisitions and Partnerships: Targeted acquisitions and collaborations to broaden product offerings, enhance technological capabilities, and expand market reach.

Looking at future revenue growth projections, analysts estimate varied outcomes. While specific figures fluctuate based on market conditions and internal strategies, the consensus points towards steady growth contingent upon successful execution of strategic initiatives. Earnings estimates are similarly dependent on factors such as cost management, pricing strategies, and overall market demand. For example, Under Armour, Inc. (UA) reported total revenue increased 2% to $5.7 billion and adjusted EPS increased 148% to $0.53 in the fiscal year 2024. These numbers give an idea about the potential growth for Under Armour, Inc. (UA).

Strategic initiatives and partnerships poised to drive future growth encompass:

• Digital Transformation: Enhancing online presence and e-commerce capabilities to drive direct-to-consumer sales and improve customer engagement.
• Sustainability Initiatives: Implementing sustainable practices and product offerings to appeal to environmentally conscious consumers.
• Brand Partnerships: Collaborating with athletes, influencers, and other brands to enhance brand visibility and credibility.

Under Armour, Inc. (UA) possesses several competitive advantages that position it for sustained growth:

• Brand Recognition: Strong brand equity and recognition among athletes and consumers, built upon a reputation for performance and innovation.
• Product Differentiation: Unique product offerings and technologies that differentiate the brand from competitors, catering to specific athletic needs and preferences.
• Distribution Network: Extensive distribution network, including retail stores, e-commerce platforms, and wholesale partnerships, providing broad market access.

To provide a clearer picture, consider a summary of Under Armour, Inc. (UA)'s financial performance:

For further insights into Under Armour, Inc. (UA)'s guiding principles, see: Mission Statement, Vision, & Core Values of Under Armour, Inc. (UA).