Under Armour (UA) is set to report earnings for its 2nd quarter of the 2015 fiscal year before the bell opens the market tomorrow morning. The Estimize EPS consensus is set at $.07, 2 cents lower than it was for the same quarter last year. However, Estimize is projecting a quarter-over-quarter increase in revenue to $772M, which would amount to an increase of 27%.
Estimize has historically been quite accurate for UA’s earnings numbers as the company has beaten Wall Street’s earnings expectations in 95% of occasions, compared to just 27% for the Estimize consensus. In terms of revenue, UA has surpassed Wall Street’s expectations 92% of the time compared to beating the Estimize revenue number on 53% of releases.
The rise in health and fitness trends amongst consumers, combined with the popularity of athleisure wear, has given strength to Under Armour’s rise amongst already established companies like Nike and Adidas. The company has recently taken some strategic initiatives to propel itself to the forefront of the athletic apparel industry.
In January of this year, Jordan Spieth re-signed with Under Armour, agreeing to a new 10-year deal. It has undoubtedly paid off for the company, as Spieth won The Masters and The US Open earlier this year. Spieth will continue to serve a vital role for the company’s marketing campaigns as he progresses throughout his golf career.
In February, Under Armor made a splash by acquiring MyFitnessPal for $475 million, hoping to channel the app’s 80 million users into paying customers for Under Armor apparel. Company executives saw the move not only as a way to align itself with the health-conscious wave of consumers and brands, but also to capitalize on the high demand for fitness gear carried by consistent gym-goers. Investors will be keen to see how this acquisition affected revenue growth over the past quarter.
Other sources of positive surprises could stem from watching trends in Under Armour over social media. Chris Camillo, the founder of Ticker Tags, has been monitoring social mentions of Under Armour sponsored athletes like Steph Curry, Jordan Spieth, and Cam Newton. Camillo says that the activity across twitter for these athletes is unprecedented, and it has exploded year-over-year. The apparel that stems from these athletes such as shoes and golf polos is expected to follow suit as well.
Year-to-date (YTD), the stock has returned an impressive 32.16%, putting its returns above both its competitor Nike and the S&P 500 at 18.73% and 2.88%, respectively.
The stock’s trailing twelve month (TTM) price-to-earnings ratio has also reached its all-time high of 96.53X. The last time the company experienced a P/E ratio this high was for a couple of quarters following the company’s initial public offering. Since early 2009, it has been steadily increasing.
Look for big numbers on both Under Armour’s top and bottom line tomorrow morning and be sure to pay attention to how the stock price reacts. As always, don’t forget to make any last minute estimates here as well.