A month has gone by since the last earnings report for Under Armour (UAA Quick QuoteUAA - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Under Armour due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Under Armour Q1 Earnings Top, Revenues Down Y/Y

Under Armour delivered better-than-expected results in first-quarter fiscal 2024, wherein revenues and earnings surpassed the Zacks Consensus Estimate. Both the top and bottom lines fell year over year. However, the company reaffirmed guidance for fiscal 2024.

The company reported adjusted earnings of 2 cents a share, which beat the Zacks Consensus Estimate of a loss of 3 cents per share. The company recorded earnings of 20 cents a share in the year-ago period.

Meanwhile, net revenues of $1,317 million came ahead of the consensus estimate of $1,298 million but fell 2% on a year-over-year basis. The metric also slipped 1% on a currency-neutral basis.

The company’s wholesale revenues decreased 6% year over year to $742 million, while direct-to-consumer (DTC) revenues inched up 4% to $544 million due to a 6% rise in e-commerce revenues, which represented 40% of the total DTC business. Sturdy results in the e-commerce and retail channels aided the performance. It recorded 3% growth in owned and operated store revenues.

Let’s Delve Deeper

By product category, Apparel revenues edged down 5% year over year to $824.7 million, while Footwear revenues increased 5% to $363.7 million. Revenues from the Accessories category inched up 1% to $97.9 million. Meanwhile, Licensing revenues tumbled 10.9% to $25.1 million, driven by softness in the Japanese licensee and North American unit.

Net revenues from North America decreased 9.1% to $826.7 million. Meanwhile, revenues from the international business increased 12% (up 15% on a currency-neutral basis) to $485 million.

Within the international business, net revenues in EMEA jumped 10.5% to $226.6 million (up 11% at constant currency), 14.5% in Asia-Pacific (up 21% at constant currency), and 12.7% in Latin America (up 5% at constant currency).

The company’s gross margin shrunk 60 basis points to 46.1% from the prior-year period due to increased promotions and adverse foreign currency movements, partly offset by supply-chain gains associated with reduced freight expenses. Selling, general and administrative (SG&A) expenses dipped 1% to $587 million.

The company’s operating income fell to $20.9 million from $34.5 million. The operating margin was 1.6%, down from 2.6% in the year-earlier quarter.

Other Financial Details

Under Armour ended the quarter with cash and cash equivalents of nearly $703.6 million, long-term debt (net of current maturities) of $594.1 million and total stockholders' equity of $2,005.4 million. The inventory jumped 38% to $1.3 billion.

For fiscal 2024, management expects capital expenditures in the range of $250-$270 million.

Guidance

Management reiterated view for fiscal 2024. For the current fiscal year, Under Armour expects revenues to be flat to slightly up. It expects the gross margin to be up 25-75 basis points, compared with the prior year's margin of 44.9%, backed by supply-chain tailwinds with respect to lower freight costs. The figure is likely to be partly offset by mix impacts stemming from higher off-price revenues and increased promotions in the company's DTC business. SG&A expenses are anticipated to be flat to slightly up.

Under Armour expects the operating income to be between $310 million and $330 million versus the comparable baseline period’s operating income of $284 million.

UAA expects earnings in the band of 47-51 cents per share, down from 84 cents per share reported in fiscal 2023. The company reported adjusted earnings of 58 cents a share for the comparable baseline period. Capital expenditures are likely to come in the band of $250-$270 million.

For the fiscal second quarter, revenues are likely to be flat to down slightly year over year, including a low single-digit fall in the company’s North American business. This will be partly offset by mid-single-digit increase in the international business. In addition, it anticipates the year's highest revenue growth rate in the fourth quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Under Armour has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Under Armour has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Under Armour belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, V.F. (VFC Quick QuoteVFC - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

V.F. reported revenues of $2.09 billion in the last reported quarter, representing a year-over-year change of -7.8%. EPS of -$0.15 for the same period compares with $0.09 a year ago.

V.F. is expected to post earnings of $0.67 per share for the current quarter, representing a year-over-year change of -8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +12.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for V.F. Also, the stock has a VGM Score of C.