Under Armour's Tumble and Recovery Attempt
Downgrade in Under Armour's Rating to Sell Status: Justified valuation upgrade questionable
The Rough Patch
Under Armour, Inc. (NYSE:UAA) has found itself in a challenging position, with the stock teetering on a perilous edge. After questioning Under Armour's fortune, I assigned a "hold" rating to the company[1]. The sticks and stones hurled at UAA have created a crossroads where success and failure hang precariously in the balance.
The Analysts' Take
The scholarly divination of Wall Street's prophets has been a mixed bag for Under Armour. Baird has cast a shade of "Neutral" upon the company, suggesting a future price target of $7.00 by May 2025[3][5]. Meanwhile, JPMorgan has played the pessimist, reducing their price target from $7.00 to $6.00, keeping their Underweight rating[5].
The Stock's Dance of Fortune
UAA's stock has had a tumultuous dance with fortune. As of May 15, 2025, the stock concluded its day at $6.54, a noteworthy increase from $6.27 on May 14[2]. Despite this uptick, the stock has slid 24.5% in 2025 but has leaped nearly 10% in May[4].
The Financials, A Mixed Bag
The company's latest financial report shows a diverse picture. Under Armour managed to beat revenue expectations, clocking in at $1.18 billion compared to an estimated $1.16 billion[3]. However, the company reported an EPS loss of $0.08, which was marginally better than the projected loss of ($0.09)[3].
The Stock's Health Check
Under Armour has a debt-to-equity ratio of 0.30, a current ratio of 2.01, and a quick ratio of 1.19[3]. The stock boasts a sizable market capitalization of $2.70 billion, but its P/E ratio plummets below the horizon at -21.66[3].
The Verdict
Under Armour finds itself at a pivotal juncture, with a stormy sea of analyst opinions and uncertain stock performance. Despite some analysts maintaining their positive outlook and the stock's recent financial victories, the company continually faces difficulties such as negative profit margins and weakening global sales[3][4]. The stock's ability to surpass revenue expectations and recent gains hint at a possible road to recovery, but the obstacles remain daunting.
Investors may consider the challenges Under Armour is facing in its business, as indicated by the company's stock performance and financials. Although the stock has shown signs of recovery with an increase in share price and revenue beating expectations, the company continues to struggle with negative profit margins and weakening global sales. This, combined with a low P/E ratio, suggests that investing in Under Armour's future is a complex financial decision.
