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The Zacks Analyst Blog Highlights: Under Armour, G-III, Ralph Lauren and Columbia Sportswear
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For Immediate Release
Chicago, IL – April 29, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Under Armour, Inc. (UAA - Free Report) , G-III Apparel Group, Ltd. (GIII - Free Report) , Ralph Lauren Corp. (RL - Free Report) and Columbia Sportswear Company (COLM - Free Report) .
Here are highlights from Friday’s Analyst Blog:
What’s Driving Under Armour’s 24% Growth in the Past 6 Months?
Under Armour, Inc. is gaining from its focus on brand development as well as expansion of direct-to-consumer (DTC) and technology-based fitness businesses. Furthermore, apart from bolstering e-commerce platforms, the company continues to look for opportunities to expand its global footprint.
Backed by these tailwinds, shares of this Baltimore, Maryland based company have increased approximately 24% in the past six months compared with the industry’s growth of 16.1%.
Let’s take a closer look at the aspects driving the company’s performance.
Factors Driving the Stock
With rising health consciousness, sports apparel makers like Under Armour are entering into the business of fitness gadgets and other tracking platforms to attract more customers. The acquisition of MapMyFitness, Endomondo and MyFitnessPal are in tune with the company’s strategy of expanding its reach in the fitness space. Also, management is impressed with the popularity of UA HOVR. The company is now banking on three platforms — HOVR, Charge, and Micro G — to boost growth.
Under Armour is poised to increase its global footprint and market share via store expansion initiatives, and enhancement of the e-commerce platform. In the process, it opened factory and brand stores in Canada, and China along with providing franchise licenses in many nations. To harness benefits from growth areas, it intends to consistently invest in international, women's and footwear businesses.
Management expects the digital platform to boost performance and plans to enhance digital engagement. Also, this Zacks Rank #3 (Hold) stock is progressing well with its multi-year transformation plan, which entails effective innovations and strict go-to-market processes, amongst other initiatives.
Apart from these, the company is expanding its DTC business in the U.K., Germany and the Netherlands. Further, it rolled out e-commerce platforms in countries like Mexico, Australia, New Zealand and Chile. Management expects DTC business to be up at a mid-single digit rate in 2019.
Based on such robust growth plans, the company expects the top line to increase in a low-double-digit rate in 2023. Earnings per share are expected to advance 40% on a five-year compounded annual growth rate basis. Moreover, management envisions net revenues to increase 3-4% in 2019. Wholesale revenues are likely to be up at a low single-digit rate.
Under Armour anticipates gross margin to improve 60-80 bps. The expansion is expected to be backed by favourable channel mix, stemming from reduced planned sales to off-price networks and increased proportion of direct-to-consumer sales.
Bottom Line
Soft sales in North America have been a major concern for the company. Net revenues from North America fell 5.8% during the final quarter of 2018 due to contraction in wholesale business and reduced sales to off-price channel. Management projects mid-single-digit decline in revenues from the North America region during the first quarter of 2019. Change in business model in Latin America is also likely to hurt revenues.
Nevertheless, we expect the aforementioned upsides to address the challenges and help the company sustain growth momentum.
3 Stocks to Watch
G-III Apparel Group, Ltd. outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ralph Lauren Corp. has a long-term earnings growth rate of 10.3% and a Zacks Rank #1.
Columbia Sportswear Company has a long-term earnings growth rate of 10.9% and a Zacks Rank #1.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Under Armour, G-III, Ralph Lauren and Columbia Sportswear
For Immediate Release
Chicago, IL – April 29, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Under Armour, Inc. (UAA - Free Report) , G-III Apparel Group, Ltd. (GIII - Free Report) , Ralph Lauren Corp. (RL - Free Report) and Columbia Sportswear Company (COLM - Free Report) .
Here are highlights from Friday’s Analyst Blog:
What’s Driving Under Armour’s 24% Growth in the Past 6 Months?
Under Armour, Inc. is gaining from its focus on brand development as well as expansion of direct-to-consumer (DTC) and technology-based fitness businesses. Furthermore, apart from bolstering e-commerce platforms, the company continues to look for opportunities to expand its global footprint.
Backed by these tailwinds, shares of this Baltimore, Maryland based company have increased approximately 24% in the past six months compared with the industry’s growth of 16.1%.
Let’s take a closer look at the aspects driving the company’s performance.
Factors Driving the Stock
With rising health consciousness, sports apparel makers like Under Armour are entering into the business of fitness gadgets and other tracking platforms to attract more customers. The acquisition of MapMyFitness, Endomondo and MyFitnessPal are in tune with the company’s strategy of expanding its reach in the fitness space. Also, management is impressed with the popularity of UA HOVR. The company is now banking on three platforms — HOVR, Charge, and Micro G — to boost growth.
Under Armour is poised to increase its global footprint and market share via store expansion initiatives, and enhancement of the e-commerce platform. In the process, it opened factory and brand stores in Canada, and China along with providing franchise licenses in many nations. To harness benefits from growth areas, it intends to consistently invest in international, women's and footwear businesses.
Management expects the digital platform to boost performance and plans to enhance digital engagement. Also, this Zacks Rank #3 (Hold) stock is progressing well with its multi-year transformation plan, which entails effective innovations and strict go-to-market processes, amongst other initiatives.
Apart from these, the company is expanding its DTC business in the U.K., Germany and the Netherlands. Further, it rolled out e-commerce platforms in countries like Mexico, Australia, New Zealand and Chile. Management expects DTC business to be up at a mid-single digit rate in 2019.
Based on such robust growth plans, the company expects the top line to increase in a low-double-digit rate in 2023. Earnings per share are expected to advance 40% on a five-year compounded annual growth rate basis. Moreover, management envisions net revenues to increase 3-4% in 2019. Wholesale revenues are likely to be up at a low single-digit rate.
Under Armour anticipates gross margin to improve 60-80 bps. The expansion is expected to be backed by favourable channel mix, stemming from reduced planned sales to off-price networks and increased proportion of direct-to-consumer sales.
Bottom Line
Soft sales in North America have been a major concern for the company. Net revenues from North America fell 5.8% during the final quarter of 2018 due to contraction in wholesale business and reduced sales to off-price channel. Management projects mid-single-digit decline in revenues from the North America region during the first quarter of 2019. Change in business model in Latin America is also likely to hurt revenues.
Nevertheless, we expect the aforementioned upsides to address the challenges and help the company sustain growth momentum.
3 Stocks to Watch
G-III Apparel Group, Ltd. outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ralph Lauren Corp. has a long-term earnings growth rate of 10.3% and a Zacks Rank #1.
Columbia Sportswear Company has a long-term earnings growth rate of 10.9% and a Zacks Rank #1.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.