Stephen Curry Makes Under Armour (UA) Soar, & Cam Newton Is On Deck
Under Armour (UA) shareholders owe NBA star Stephen Curry a big thank-you today. His star-power name helped Under Armour nearly twice as many shoes last quarter as it did in the same quarter a year earlier, contributing to yet-another earnings beat for the sports apparel maker, and extending a what's becoming a very long, multi-year growth streak.
Last quarter, Under Armour earned 48 cents per share on sales of $1.17 billion. Analysts were only calling for a bottom line of 46 cents per share and revenue of $1.12 billion. More impressive is the growth the company drove from the year-ago bottom line of 40 cents per share and sales of $895.2 million.
Footwear did a great deal of the heavy lifting on the growth front, even if shoes are only a small part of the revenue mix for the company. Leveraging the Stephen Curry name (Curry is a phenom who plays for the NBA's Golden State Warriors). The company sold $167 million worth of footwear last quarter, up 95% from a year earlier.
The strong numbers rolled in despite fears that last quarter wouldn't be a great one.
Oddly warm weather during the early and middle part of calendar Q4 drove UA shares down 30% between the end of September and Wednesday's close, as the market wasn't convinced the company's winter-oriented apparel wouldn't do well; the Jordan Spieth buzz was starting to wither too. As CEO Kevin Plank explained, though "Personal health and fitness is a year-round, all-weather business."
Apparel sales were up 22% on a year-over-year basis, underscoring Plank's point of view.
The company also offered 2016 revenue guidance of $4.95 billion. That's 25% better than 2015's top line, and stronger than the $4.9 billion analysts had modeled.
As for the stock, the 23% jump on Thursday is daunting, and a tough act to follow. The 30% pullback leading into the earnings report, however, wipes away much of the froth; the big move on Thursday just gets UA back to its recent average price. All the same, the forward-looking P/E of 62.6 may put a cap on any further upside that the stock's sheer overbought condition doesn't.
Then again, with Cam Newton -- another Under Armour endorser -- on the verge of playing (and possibly winning) Super Bowl 50, investors may well overlook the wild valuation for a while, knowing consumers are going to looking to wear what Cam wears.