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Factors to Know Ahead of Under Armour's (UAA) Q1 Earnings

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Under Armour, Inc. (UAA - Free Report) is likely to register an increase in the top line when it reports first-quarter 2021 numbers on May 4, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $1,122 million, indicating a jump of 20.6% from the prior-year reported figure.

The bottom line of this developer, marketer and distributor of apparel, footwear, and accessories is also expected to improve sharply year over year. The Zacks Consensus Estimate for earnings for the quarter under review has been stable at 4 cents in the past 30 days. The figure suggests an improvement from loss of 34 cents reported in the year-ago period.

Notably, this Baltimore, MD-based company has a trailing four-quarter earnings surprise of 191.3%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a significant margin of 271.4%.

Key Things to Note

Under Armour’s commitment toward product innovation, investments in own stores and digitization to directly reach customers, and selling more inventory at full price are likely to have favorably impacted first-quarter performance. Undeniably, the company has been focusing on strengthening brand through enhanced customer connections and strict go-to-market process as well as expanding direct-to-consumer business. We also note that the company’s international business has been a significant revenue driver.

Meanwhile, the company has been taking several actions to stay firm amid the ongoing pandemic. These includes strengthening supply chain, managing inventory and containing costs. The company has been also curbing non-essential operating expenses and optimizing capital expenditures.

On its last earnings call, management guided approximately 20% increase in first-quarter revenues. This is because roughly 130 million of orders shifted out of fourth-quarter 2020 into the first quarter of 2021 due to timing impacts from COVID-19 related to customer order flow and changes in supply chain timing. The company also projected adjusted earnings to be 3 cents a share for the quarter.

Additionally, management predicted gross margin expansion of about 180-200 basis points compared with the prior year, driven by pricing benefits related to lower promotions as well as continued supply chain benefits related to product cost improvements. Management highlighted that benefits from pricing and supply chain efficiency might partly be offset by the impact of the divestment of the high gross margin business, MyFitnessPal. The company also envisioned adjusted operating income between $30 million and $35 million.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote

Sneak Peek into Estimates

We note that the Zacks Consensus Estimate for first-quarter revenues for Apparel and Footwear categories are pegged at $725 million and $264 million, respectively, indicating growth of 21.2% and 25.9% year over year. The consensus estimate for Accessories stands at $93 million, suggesting an improvement of 37.3% from the prior-year quarter.

Furthermore, the Zacks Consensus Estimate for revenues at North America, EMEA, and Latin America segments are pegged at $742 million, $156 million and $53 million, respectively. These figures suggest respective increase of 21.8% and 13.1% for North America and EMEA on a year-over-year basis. The same for Latin America indicates a marginal decline of 0.2%. Again, the Zacks Consensus Estimate for revenues of $165 million for Asia-Pacific suggests an increase of about 72.4% from the year-ago period.

What the Zacks Model Unveils

Our proven model does not conclusively predict 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 odds of an earnings beat. But that’s not the case here.

Although Under Armour carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +22.92% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tapestry (TPR - Free Report) has an Earnings ESP of +11.89% and a Zacks Rank #2.

NIKE, Inc. (NKE - Free Report) has an Earnings ESP of +15.26% and a Zacks Rank #3.

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Abercrombie & Fitch Company (ANF) - free report >>

Under Armour, Inc. (UAA) - free report >>

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