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Under Armour (UAA) to Post Q1 Earnings: What's in the Cards?
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Under Armour, Inc. (UAA - Free Report) , the developer, marketer and distributor of apparel, footwear, and accessories, is slated to report first-quarter 2017 results on Apr 27. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 27% despite missing the mark by 8% in the preceding quarter. Let’s see how things are shaping up prior to this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Under Armour will be able to post positive surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is pegged at a loss of 4 cents. In the year-ago quarter, the company had reported earnings per share of 4 cents. We note that the Zacks Consensus Estimate has witnessed downward revisions in the past 60 days. Analysts polled by Zacks expect revenues of $1,120 million, up nearly 7% from the year-ago quarter.
We noted that the stock has underperformed both the Zacks categorized Textile-Apparel Manufacturing industry in the past three months. The company’s shares have declined 35.2%, while the Zacks categorized industry has decreased 8.8%. The sharp decline in share price in the three months can largely be attributed to lower-than-expected fourth-quarter 2016 results and dismal 2017 outlook.
Factors Influencing this Quarter
Under Armour’s sustained focus on brand development, expansion of DTC business, product innovation and foray into the technology-based fitness business bode well. Further, it has rolled out eCommerce platforms in countries like Mexico, Australia, New Zealand and Chile. Another major tool used by Under Armour to expand presence is the development of an International eCommerce team. In fourth-quarter 2016, international business increased 55% to $215 million.
However, 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. Management anticipates 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%. Due to increase in strategic investments, Under Armour anticipates operating income to decline to nearly $320 million.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Under Armour is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Under Armour has an Earnings ESP of -25.00% as the Zacks Consensus Estimate is pegged at a narrower loss of 4 cents than the Most Accurate Estimate of a loss of 5 cents. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Church & Dwight Co., Inc. (CHD - Free Report) currently has an Earnings ESP of +2.17% and a Zacks Rank #3.
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) currently has an Earnings ESP of +17.24% and a Zacks Rank #3.
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Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Under Armour (UAA) to Post Q1 Earnings: What's in the Cards?
Under Armour, Inc. (UAA - Free Report) , the developer, marketer and distributor of apparel, footwear, and accessories, is slated to report first-quarter 2017 results on Apr 27. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 27% despite missing the mark by 8% in the preceding quarter. Let’s see how things are shaping up prior to this announcement.
What to Expect?
The question lingering in investors’ minds now is whether Under Armour will be able to post positive surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is pegged at a loss of 4 cents. In the year-ago quarter, the company had reported earnings per share of 4 cents. We note that the Zacks Consensus Estimate has witnessed downward revisions in the past 60 days. Analysts polled by Zacks expect revenues of $1,120 million, up nearly 7% from the year-ago quarter.
We noted that the stock has underperformed both the Zacks categorized Textile-Apparel Manufacturing industry in the past three months. The company’s shares have declined 35.2%, while the Zacks categorized industry has decreased 8.8%. The sharp decline in share price in the three months can largely be attributed to lower-than-expected fourth-quarter 2016 results and dismal 2017 outlook.
Factors Influencing this Quarter
Under Armour’s sustained focus on brand development, expansion of DTC business, product innovation and foray into the technology-based fitness business bode well. Further, it has rolled out eCommerce platforms in countries like Mexico, Australia, New Zealand and Chile. Another major tool used by Under Armour to expand presence is the development of an International eCommerce team. In fourth-quarter 2016, international business increased 55% to $215 million.
However, 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. Management anticipates 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%. Due to increase in strategic investments, Under Armour anticipates operating income to decline to nearly $320 million.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Under Armour is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Under Armour has an Earnings ESP of -25.00% as the Zacks Consensus Estimate is pegged at a narrower loss of 4 cents than the Most Accurate Estimate of a loss of 5 cents. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
McDonald's Corporation (MCD - Free Report) currently has an Earnings ESP of +2.27% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Church & Dwight Co., Inc. (CHD - Free Report) currently has an Earnings ESP of +2.17% and a Zacks Rank #3.
Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) currently has an Earnings ESP of +17.24% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>