Tuesday turned out to be a nightmare for Under Armour Inc (NYSE:UA) investors, after the sportswear maker missed earnings and sales expectations in the fourth quarter, blaming its key North American business.
Earnings for the fourth quarter came in at $0.23 per share, compared to consensus estimates of $0.25. Revenue grew 12% to $1.31 billion, but lower than projections of $1.41. In addition, the company lowered its guidance for 2017, bringing estimates for operating income to drop from $420 million in 2016 to $320 million in 2017.
Under Armour shares reacted to the news, crashing over 20% to $19.45 in pre-market trading.
“We are incredibly proud that in 2016, we once again posted record revenue and earnings, however, numerous challenges and disruptions in North American retail tempered our fourth quarter results,” said Kevin Plank, Under Armour Chairman and CEO. “The strength of our Brand, an unparalleled connection with our consumers and the continuation of investments in our fastest growing businesses — footwear, international and direct-to-consumer — give us great confidence in our ability to navigate the current retail environment, execute against our long-term growth strategy and create value to our shareholders.”
“Looking forward, our successful track record of re-defining performance gives us great confidence that the opportunities for long-term growth at Under Armour have never been greater,” said Plank. “The current environment represents an inflection point to maximize our unique strengths by staying on offense — investing smartly in innovation, deepening our Brand connection with consumers and amplifying our focus on operational excellence — positioning Under Armour as a stronger company.”
On the ratings front, UA has been the subject of a number of recent research reports. In a report released yesterday, William Blair analyst Sharon Zackfia reiterated a Hold rating on UA. On January 27, Barclays’ Matthew McClintock maintained a Buy rating on the stock and has a price target of $50.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Sharon Zackfia and Matthew McClintock have a yearly average return of 4.3% and 3.0% respectively. Zackfia has a success rate of 51% and is ranked #1207 out of 4370 analysts, while McClintock has a success rate of 49% and is ranked #1472.
Overall, one research analyst has rated the stock with a Sell rating, 6 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $26.50 which is 5.6% above where the stock closed yesterday.
Under Armour, Inc. engages in the developing, marketing and distributing of branded performance apparel, footwear and accessories for men, women and youth. It operates through the following geographical segments: North America, Latin America, Europe, the Middle East, and Africa.