Under Armour, Inc. UAA shares fell 12.3% in one week, renewing questions about whether the turnaround is losing momentum or whether the selloff has improved the risk-reward setup.
The operating picture remains mixed. Weaker demand and falling earnings estimates contrast with better margins, tighter spending and early traction from higher-priced products.
Under Armour, Inc. Price, Consensus and EPS Surprise
Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote
UAA's One-Week Drop Meets a Weaker Sales Outlook
Under Armour now expects fiscal 2027 revenues to decline at a mid-single-digit rate, down from its prior outlook for a slight decrease. The revision reflects softer demand, particularly in North America and Asia-Pacific.
Second-quarter revenues are projected to fall at a high-single-digit rate. That outlook keeps near-term growth pressure elevated even as management maintains adjusted operating income guidance of $140-$160 million for the year.
Under Armour's North America Slump Raises the Stakes
North America revenues fell 9% to $609.8 million in the first quarter of fiscal 2027. Softer spring and summer wholesale orders and weaker traffic pressured e-commerce and stores, while direct-to-consumer revenues declined 5.8%.
The backdrop is challenging across athletic retail. NIKE, Inc. NKE, a major athletic footwear and apparel competitor, reported a 7% decline in fiscal 2026 fourth-quarter NIKE Direct revenues. lululemon athletica inc. LULU, a technical athletic apparel, footwear and accessories company, reported a 3% decline in first-quarter fiscal 2026 Americas revenues.
UAA's Margin Recovery Offers a Partial Counterweight
Gross margin expanded 590 basis points to 54.1% in the first quarter. Adjusted operating income reached $52.4 million, topping management's prior $30-$40 million outlook despite the 3.2% revenue decline.
The margin gain was heavily aided by a 640-basis-point benefit from tariff refunds. Still, Under Armour expects fiscal 2027 gross margin to expand 220-270 basis points, with underlying support from pricing, lower discounting and a more favorable channel mix.
Under Armour's Premiumization Faces a Demand Test
The $65 Bouncy Tee exceeded expectations while selling at full retail price, providing an early proof point for Under Armour's push to reduce promotional dependence. Management is also testing more full-price products and simplifying the assortment.
The harder test is scale. Footwear revenues fell 7.7% to $245.3 million, while e-commerce revenues dropped 12%. Product innovation can help, but broader consumer demand must improve enough for premiumization to offset weakness across major categories and channels.
UAA Valuation Leaves Little Room for Execution Misses
UAA trades at 39.4X forward 12-month earnings per share, versus 14.7X for the Zacks sub-industry and its own five-year median of 19.4X. That premium makes it difficult to argue that the one-week drop alone has made the shares inexpensive.
Image Source: Zacks Investment Research
Estimate trends add caution. The Zacks Consensus Estimate for current-fiscal-year earnings has moved 6.1% lower over the past four weeks, suggesting that expectations are still being reset as the revenue outlook weakens.
UAA's Mixed Scores Keep the Setup Balanced
The one-week decline has lowered UAA's share price, but the operating case still depends on Under Armour converting better cost control and product discipline into steadier demand. Near-term sales pressure and a premium earnings multiple leave limited room for execution misses.
UAA currently carries a Zacks Rank #3 (Hold), with a VGM Score of C, Growth Score of A, Value Score of D and Momentum Score of F. The Growth Score is a positive, but weaker value and momentum characteristics keep the broader style profile mixed rather than signaling a clear near-term edge. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Â
Â
Â
(0) comments
Welcome to the discussion.
Log In
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.