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Factors Setting the Tone for Under Armour (UAA) Q3 Earnings
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Under Armour, Inc. (UAA - Free Report) is scheduled to report third-quarter 2019 financial numbers on Nov 4, before the opening bell. We note that the bottom line of this Baltimore, MD-based company has surpassed the Zacks Consensus Estimate in the trailing four quarters. Investors are counting on another beat by this athletic apparel maker in the to-be-reported quarter. If all goes well, this will be the eighth and fifth straight quarter of top and bottom-line beat, respectively.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 18 cents, down from 25 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the past 30 days. The consensus estimate for revenues stands at $1.41 billion, suggesting a decline of approximately 2.4% from the year-ago quarter.
Key Things to Note
In the last earnings call, Under Armour guided revenue decline of 2-3% for the third quarter. The projection took into account reduced sales to the off-price channel, softness in direct-to-consumer business, and unfavorable timing of distributor sales in international regions.
Sales decline in North America business has been a major concern. Net revenues from North America fell 3.2% in the last reported quarter owing to decline in both wholesale and direct-to-consumer businesses. For the third quarter, the company forecasted revenue decline in mid-single digit range in North America business.
For the third quarter, the company envisioned gross margin expansion of approximately 120-140 basis points, primarily on account of channel mix benefits with lower off-price sales, and supply chain initiatives including lower air freight and product cost improvements.
The company estimated operating income in the range of $115-$120 million and earnings between 17 cents and 18 cents a share for the quarter under review. These projections indicate decline from adjusted operating income of $143 million and adjusted earnings of 25 cents a share reported in the prior-year period. The impact of lower revenues as projected, any deleverage in SG&A expenses and adverse currency fluctuations might get reflected in the bottom line.
Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour has been progressing well with its multi-year transformation plan and remains focused on strengthening brand through enhanced customer connections, effective innovations and strict go-to-market process. We also anticipate the company to continue gain from technology-based fitness businesses. In order to harness benefits from growth areas, the company consistently invest in the direct-to-consumer, international, women's and footwear businesses. In fact, international business remains one of the key catalysts. In the last earnings call, the company projected growth in mid-single-digit range in international revenues for the third quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Under Armour this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Under Armour has a Zacks Rank #2 and an Earnings ESP of +9.37%.
3 More Stocks With a Favorable Combination
Here are three more companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Children's Place (PLCE - Free Report) has an Earnings ESP of +17.24% and a Zacks Rank #3.
Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +0.67% and a Zacks Rank #3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
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Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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Factors Setting the Tone for Under Armour (UAA) Q3 Earnings
Under Armour, Inc. (UAA - Free Report) is scheduled to report third-quarter 2019 financial numbers on Nov 4, before the opening bell. We note that the bottom line of this Baltimore, MD-based company has surpassed the Zacks Consensus Estimate in the trailing four quarters. Investors are counting on another beat by this athletic apparel maker in the to-be-reported quarter. If all goes well, this will be the eighth and fifth straight quarter of top and bottom-line beat, respectively.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 18 cents, down from 25 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the past 30 days. The consensus estimate for revenues stands at $1.41 billion, suggesting a decline of approximately 2.4% from the year-ago quarter.
Key Things to Note
In the last earnings call, Under Armour guided revenue decline of 2-3% for the third quarter. The projection took into account reduced sales to the off-price channel, softness in direct-to-consumer business, and unfavorable timing of distributor sales in international regions.
Sales decline in North America business has been a major concern. Net revenues from North America fell 3.2% in the last reported quarter owing to decline in both wholesale and direct-to-consumer businesses. For the third quarter, the company forecasted revenue decline in mid-single digit range in North America business.
For the third quarter, the company envisioned gross margin expansion of approximately 120-140 basis points, primarily on account of channel mix benefits with lower off-price sales, and supply chain initiatives including lower air freight and product cost improvements.
The company estimated operating income in the range of $115-$120 million and earnings between 17 cents and 18 cents a share for the quarter under review. These projections indicate decline from adjusted operating income of $143 million and adjusted earnings of 25 cents a share reported in the prior-year period. The impact of lower revenues as projected, any deleverage in SG&A expenses and adverse currency fluctuations might get reflected in the bottom line.
Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote
A Sneak Peek into the Fundamentals
Under Armour has been progressing well with its multi-year transformation plan and remains focused on strengthening brand through enhanced customer connections, effective innovations and strict go-to-market process. We also anticipate the company to continue gain from technology-based fitness businesses. In order to harness benefits from growth areas, the company consistently invest in the direct-to-consumer, international, women's and footwear businesses. In fact, international business remains one of the key catalysts. In the last earnings call, the company projected growth in mid-single-digit range in international revenues for the third quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Under Armour this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Under Armour has a Zacks Rank #2 and an Earnings ESP of +9.37%.
3 More Stocks With a Favorable Combination
Here are three more companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Boot Barn Holdings (BOOT - Free Report) has an Earnings ESP of +4.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place (PLCE - Free Report) has an Earnings ESP of +17.24% and a Zacks Rank #3.
Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +0.67% and a Zacks Rank #3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>