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Have You Offloaded Under Armour (UAA) from Your Portfolio?
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Shares of Under Armour, Inc. (UAA - Free Report) have declined 47.7% in the past six months, wider than the Zacks categorized Textile-Apparel manufacturing industry which has decreased 14.8%. The decline can be attributed to lower-than-expected fourth-quarter 2016 results, higher interest expenses and dismal 2017 guidance.
Ever since the Zacks Rank #4 (Sell) company reported both earnings and revenues miss in fourth-quarter 2016, its shares have declined more than 28%. Notably, this is for the first time in the last 27 quarters that the company has reported revenue growth of less than 20%.
Under Armour has been grappling with higher interest expense on account of higher debt level. In fourth-quarter 2016, the company’s interest expenses increased to nearly $8 million in comparison with $4 million in the prior-year quarter. The company expects interest expenses to rise to roughly $40 million in 2017. We also noted that the company’s debt in the fourth quarter increased to $817 million from $669 million in the year-ago quarter.
Management expects net revenue for 2017 to be nearly $5.4 billion. This represents an increase of 11–12% over the 2016 level. In 2016, the company’s revenue grew 22%. The company expects gross margin be down slightly year over year owing to foreign currency headwinds and better performance of footwear as well as international businesses in the overall mix, which has lesser margins in comparison with apparel and North American businesses. Under Armour anticipates operating income to decline to nearly $320 million due to increase in strategic investments.
Following tepid guidance, the Zacks Consensus Estimate has been witnessing a downward revision. In the past 60 days, the Zacks Consensus Estimate for the first quarter has declined to a loss of 3 cents per share from a profit of 4 cents. Moreover, the Zacks Consensus Estimate for 2017 and 2018 has moved down by 26 cents and 28 cents to 43 cents and 52 cents, respectively in the same time frame.
Stocks to Consider
Better-ranked stocks in the retail sector include Kate Spade & Company , The Children's Place, Inc. (PLCE - Free Report) and Foot Locker, Inc. (FL - Free Report) . Both Kate Spade & Company and Children's Place sport a Zacks Rank #1 (Strong Buy) while Foot Locker carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kate Spade & Company delivered an average positive earnings surprise of 14.6% in the trailing four quarters and has a long-term earnings growth rate of 28.3%.
Children's Place delivered an average positive earnings surprise of 39% in the trailing four quarters and has a long-term earnings growth rate of 8%.
Foot Locker delivered an average positive earnings surprise of 2.2% in the trailing four quarters and has a long-term earnings growth rate of 9.7%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research.See these stocks free >>
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Have You Offloaded Under Armour (UAA) from Your Portfolio?
Shares of Under Armour, Inc. (UAA - Free Report) have declined 47.7% in the past six months, wider than the Zacks categorized Textile-Apparel manufacturing industry which has decreased 14.8%. The decline can be attributed to lower-than-expected fourth-quarter 2016 results, higher interest expenses and dismal 2017 guidance.
Ever since the Zacks Rank #4 (Sell) company reported both earnings and revenues miss in fourth-quarter 2016, its shares have declined more than 28%. Notably, this is for the first time in the last 27 quarters that the company has reported revenue growth of less than 20%.
Under Armour has been grappling with higher interest expense on account of higher debt level. In fourth-quarter 2016, the company’s interest expenses increased to nearly $8 million in comparison with $4 million in the prior-year quarter. The company expects interest expenses to rise to roughly $40 million in 2017. We also noted that the company’s debt in the fourth quarter increased to $817 million from $669 million in the year-ago quarter.
Management expects net revenue for 2017 to be nearly $5.4 billion. This represents an increase of 11–12% over the 2016 level. In 2016, the company’s revenue grew 22%. The company expects gross margin be down slightly year over year owing to foreign currency headwinds and better performance of footwear as well as international businesses in the overall mix, which has lesser margins in comparison with apparel and North American businesses. Under Armour anticipates operating income to decline to nearly $320 million due to increase in strategic investments.
Following tepid guidance, the Zacks Consensus Estimate has been witnessing a downward revision. In the past 60 days, the Zacks Consensus Estimate for the first quarter has declined to a loss of 3 cents per share from a profit of 4 cents. Moreover, the Zacks Consensus Estimate for 2017 and 2018 has moved down by 26 cents and 28 cents to 43 cents and 52 cents, respectively in the same time frame.
Stocks to Consider
Better-ranked stocks in the retail sector include Kate Spade & Company , The Children's Place, Inc. (PLCE - Free Report) and Foot Locker, Inc. (FL - Free Report) . Both Kate Spade & Company and Children's Place sport a Zacks Rank #1 (Strong Buy) while Foot Locker carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kate Spade & Company delivered an average positive earnings surprise of 14.6% in the trailing four quarters and has a long-term earnings growth rate of 28.3%.
Children's Place delivered an average positive earnings surprise of 39% in the trailing four quarters and has a long-term earnings growth rate of 8%.
Foot Locker delivered an average positive earnings surprise of 2.2% in the trailing four quarters and has a long-term earnings growth rate of 9.7%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>