Under Armour, Inc. (
UA) just signed a 5-year $17.5 million dollar deal with the University of Maryland as it approaches its Oct 28 earnings announcement. The company has been beat up in the past couple weeks and is now trading at a fair PEG ratio near 1.0.
Company Description
Under Armour is a leading developer, marketer and distributor of branded performance products for men, women and youth. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products.
The Company's products are worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. Under Armour's products are currently sold in the United States, Canada, Japan and the United Kingdom. Company headquarters are in Baltimore, Maryland and the stock carries a market cap of $1.4 billion.
30% Growth in Net Revenue
Under Armour announced second-quarter results on July 29 which included a 30% increase in net revenue, up to $156.7 million. Earnings per share were 3 cents, beating the consensus estimate of 1 cent making it the fourth surprise in the past 4 quarters.
Under Armour is set to announce its third-quarter results on Oct 28. Analysts are expecting the company to announce 51 cents per share or a 28% year-over-year increase. Estimates for next quarter are averaging are 57 cents, a 69% increase form the fourth quarter of 2007.
Getting a Foot in the Door
The footwear segment is expanding rapidly with revenues growing 129% year-over-year. Building of the success of the cleated footwear, Under Armour will be entering the running footwear arena.
Official Outfitter for U of Maryland
On Sep 2 Under Armour announced a 5-year $17.5 million contract with the University of Maryland. The company will provide all of schools athletes with uniforms and apparel. In addition Under Armour will receive licensing rights and marketing entitlements. The deal will go into effect on Jan 1, 2009.
The Chart
Shares of UA have been volatile this year, along with the rest of the market. The stock is now trading just above a level of support at $25 per share. After the recent sell off, the stock is trading at a PEG ratio of just under 1.0. Take a look at the chart below.
