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Here's How Under Armour (UAA) Looks Just Ahead of Q3 Earnings

Under Armour's (UAA) third-quarter results are likely to reflect its focus on product innovation, strengthening direct-to-consumer business and selling more inventory at full price.

This story originally appeared on Zacks

Under Armour, Inc. UAA is likely to register an increase in the top line when it reports third-quarter 2021 earnings on Nov 2, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $1,479 million, indicating an improvement of 3.2% from the prior-year reported figure.

The bottom line of this developer, marketer and distributor of apparel, footwear, and accessories is expected to decline year over year. The Zacks Consensus Estimate for third-quarter earnings per share has increased by a penny to 15 cents in the past 30 days. The figure suggests a sharp decline from earnings of 26 cents reported in the year-ago period.

This Baltimore, MD-based company has a trailing four-quarter earnings surprise of 355.4%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a significant margin of 300%.

- Zacks

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 the third-quarter performance. 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.

Undoubtedly, the company has been benefiting from its improved operating model and investments across product and marketing that has been helping it meet strong demand. Its effort to manage inventory, curb non-essential operating expenses and optimize capital expenditures also bodes well. On its last earnings call, management projected low single-digit growth rate for third-quarter revenues. The company guided gross margin expansion of 130-150 basis points owing to pricing benefits and channel mix.

However, divestment of the high gross margin business, MyFitnessPal, might have negatively impacted the quarter. Also, higher freight and logistics costs due to COVID-19-related supply chain constraints remain a headwind. For the third quarter, management had projected adjusted operating income in the band of $95-$105 million down from $133 million reported in the year-ago period. It had also forecast third-quarter adjusted earnings per share in the bracket of 13-15 cents, down from 26 cents in the prior-year quarter.

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 third-quarter revenues for Apparel and Footwear categories are pegged at $1,015 million and $305 million, indicating growth of 9.5% and 2.1% year over year, respectively. The consensus mark for Accessories stands at $132 million, suggesting a decline of 9% from the prior-year quarter.

The Zacks Consensus Estimate for revenues at North America, EMEA, and Asia-Pacific segments are pegged at $1,001 million, $236 million and $212 million, respectively. These figures suggest respective increase of 4% and 12.3% for North America and EMEA on a year-over-year basis, respectively. The same for Asia-Pacific indicates growth of 18.5%. The Zacks Consensus Estimate for revenues of $39.1 million for Latin America suggests a decline of about 11.9% from the year-ago period.

What Does the Zacks Model Unveil?

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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Under Armour has a Zacks Rank #3 and an Earnings ESP of +6.22%.

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

Steven Madden SHOO has an Earnings ESP of +1.30% and a Zacks Rank #2.

Hanesbrands HBI has an Earnings ESP of +1.06% and a Zacks Rank #2.

Gildan Activewear GIL has an Earnings ESP of +7.14% and a Zacks Rank #3.

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