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"Plank killed his brand's street cred with his No. 1 spokeperson, Stephen Marbury, back in Februrary."

Curry
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No. of Recommendations: 4
If you cannot stop yourself, perhaps a LEAP position would work.

If you are wrong, smaller loss. If you are right, convert to shares.

Jan 2020 $15.00 calls are under $2 right now,$10 calls under $4.




JK



The devil on your shoulder
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No. of Recommendations: 1
Awh heck ! I own it, you should too. In fact, I'll sell you all of my shares for half of what I paid for them. What's THAT tell ya ? hhmmmmm?

Rich (haywool)
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No. of Recommendations: 14
I want it. I want it bad. I want it so bad.
Please talk me out of it.


This is a company that was hugely successful in branding, attracting customers, and growing earnings. The operative word is “was.” The stock is only desirable now, even at current prices, if the company’s current problems are a blip and not a trend.

For at least the last couple of years all has not been well. By the numbers, It’s not much of a stretch to think a cascade of troubles has ensued.

It’s likely that annual per share earnings for 2017 will be much of a muchness with ’13’s. Earnings peaked in 2015 and began sliding thereafter; so did the stock price.

OK, an earnings slump. Happens to the best. Yet, I think it’s worth looking at how much more of an effort it is for the company to generate around 38¢ a share in net earnings this year than it was back in 2013.

UA’s net profit margin in 2013 was 7%. Value Line estimates this year’s net margin will be 3.2%, less than half ’13’s. In ’13, ROE was 15.4%; ROTC was 14.9%. This year ROE is likely to be 7.5%; ROTC 6.5% —similar contractions as the net profit margin.

To all appearances, UA is a company finding it twice as hard as it did five years ago to generate the same net earnings. It’s usually the case—an exception being Coca-Cola—that companies going through an earnings slump are dealing with smaller profit margins and returns on equity and capital. However, UA’s contractions are extreme, though a doubling in book value over the period, probably played a small part. It’s not realist to think that UA can quickly bounce back unless margins expand significantly and efficiency improves. Given customer sentiment, and industry competition, that’s a hard hole to dig out of once in it.

UA has ramped up its capital spending of late, so much so that free cash-flow is very low or negative. Over the last three years cap. ex. has exceeded net earnings, often by a lot, and is close to accounting for all earnings from operations. This is an unsustainable situation short of piling on significant debt.

And then there’s the stock price. A high of almost $53 a share in the fall of 2015 to a low of $10.59 is an attention grabber, but perhaps today’s low isn’t as enticing as a first glance might suggest. Even at $10 a share the shares’ P/E is 26 based on 2017 projected net earnings. Expensive for most stocks, let alone for a company in a serious funk.

<i<Morningstar is somewhat sanguine about UA’s prospects from here, considering the stock undervalued. Personally, I think their optimism comes at the expense of throwing caution to the wind and focusing on a best case scenario. Moat strength based on branding and brand loyalty is eroding in many instances and I don’t put much credence in the idea that UA can continue to charge premium prices without consequences. Sure, they have been innovative, but at this juncture perhaps “What have you done for me lately” is more on point.

To quote Value Line, “ A couple of different surveys recently conducted suggest that Under Armour is losing its cache with male teens The ever important segment is said to be looking at other brands, especially when choosing footwear. Making matters worse, it is rumored that Amazon is considering entering the sportswear space.” If being in the good graces of male teens impacts on a business’ results in a meaningful way, then that isn’t a business I’d likely invest in, even in the best of times. Who are more impressionable and fickle than teenagers?

VL’s commentary ends: “All but the most aggressive investors will want to look elsewhere[…] Three to five year price recovery potential is wide, but highly speculative.”

No idea if I’ve talked you out of it, but I think it’s safe to say that investing in UA is anything but a no-brainer.

kelbon
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No. of Recommendations: 14
UA's problems started with the CEOs support and praise of Donald Trump. That was the dumbest move in an American business which was starting to establish a street cred cool. Dumb, dumb, dumb.

I gave away my new UA shoes to Salvation Army. Wore them one time. I still have my compression shirts and underwear with the UA logos which no one will see. But I won't buy anything more from UA.

UA sightings in my nightclub were growing in 2016. Now they have fallen off significantly. It's like Kevin Plank stuck a knife in his own back.

The hottest clothing trend in my club today are NFL and NBA logos on wide brim baseball caps.

NFL is manufacturing their own hats for some teams. Other teams its either Reebok or Mitchell and Ness. If I had to say one of the logos seems to be growing it's that Mitchell and Ness script on the back of the hats. Oh yeah, you leave the adhesive sticker on the brim.

Some of these kids wear new kicks and new lids every week.

Under Armour?

Gone with the wind.

CEO destroyed the cool.


p.s. The coolest snapback and fitted hats I'm seeing are "throwback" wool hats sporting old time logos of teams such as the Steelers, Cowboys, Bears, Bulls, Celtic, etc. All of these are Mitchell and Ness, except for a few NBA lids made by 59Fifty. So yeah, I'd say the logo which is on fire right now is Mitchell and Ness. A year and half ago it was Under Armour. UA was so cool 18 months ago that kids wore their hats with just the UA logo. That, my friend, is done. UA hats are like a stigma of un-cool, like wearing an Ed Hardy button shirt.

Last week, I saw my first ever Mitchell and Ness t-shirt made from Pima cotton. That script logo, keep an eye out for it. It's coming on strong.
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No. of Recommendations: 10
UA's problems started with the CEOs support and praise of Donald Trump.

Actually, they didn't.

Under Armours's problems started well before Kevin Plank praised Donald Trump on Febuary 7, 2017. He certainly didn't help himself, or the company's stock price, but the business was already slipping.

Margins, ROE, and ROTC had begun to slide significantly and Cap. Ex. and debt were well on the rise a couple of years before Mr. Plank, well, walked the plank.

Makes for a good sound bite though…

kelbon
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No. of Recommendations: 1
Sounds like the place to invest is Mitchell & Ness. It is owned by adidas (bought them in 2007)
Perhaps there are more gains in store with UA demise
https://finance.yahoo.com/quote/ADDYY?p=ADDYY
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No. of Recommendations: 2
Under Armours's problems started well before Kevin Plank praised Donald Trump on Febuary 7, 2017. He certainly didn't help himself, or the company's stock price, but the business was already slipping.

I'm well aware of this truth as I traded in/out of UA for short term swing trades.

I guess I should have been more clear.

Plank killed his brand's street cred with his No. 1 spokeperson, Stephen Marbury, back in Februrary.

Steph, although not as outspoken as Lebron James, had the hottest selling jersey the past year in the NBA. When Marbury criticized Plank, that was a signal to street fashionistas that Under Armour's little run against Nike was now over.



Were I the board of Under Armour I'd go out and hire some of the smartest hip-hop artists and NBA and NFL players to a newly expanded board, get some new blood in there who understand street fashion and credibility.

Plank has killed this brand. He must be removed. The taint of his support of Trump is the final coffin nail on a once promising brand. To change that perception Under Armour's CEO is a supporter of Trump, the CEO must be dumped.

Bold moves are needed to save this once growth brand.

p.s. Amazon just entered the same market UA is in. Whose clothing do you think will rank first in line when you use the search function on Amazon?

p.p.s. ESPN does this feature during the NBA year on "This Week's Hottest Sneaks". For Halloween, only one pair of shoes from UA were highlighted out of the Top 20. That pair belonged to Steph. Everything else was Nike and Adidas.

I daresay Nike's throwback Jordan Airs are outselling all of Under Armour's entire shoe line as the "inventory" flies out of the stores. The three barbacks at our Entertainment Complex are all wearing the new Jordan Airs, and I would say they each own about a dozen different pairs. One is in his 20s, the second in his 30s, and the third just turned 40. All three dominate the hoops league in Key West. All three are either Lithuanian or Serbian. Handsome men, in tip-top shape, these guys are like walking advertisements for Nike in front of thousands of tourists, especially young women who hit on them all the time while their husbands and boyfriends are in the Men's Room.
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Any takes on what is going on with this stock? Is it a branding/marketing issue? A distribution issue? A product issue?

Please no more political crap.

This turkey could really make people some money. Lets say the CEO goes (he should) and a new team comes in. Why can't this brand recover well?

Rob
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No. of Recommendations: 2
UA? <meh, /Shrug/>

With few rare exceptions clothing type stocks seem to have too sort a half life for my interest. As a trader I could see folks being interested but from an investing standpoint in the long term seems like they're prone to peak then fade as fashion sensibilities change. The exception being those that are large enough to play the trend with a larger stable of product/brand lines that is able to profit from the rotation in fashion trends (e.g. VFC).

As such, it's sort of an "interesting" thing to see so much energy devoted to UA over the years on a Value Investing board. That is, interesting is a slightly puzzled, looking through the safety glass at the zoo sort of way. :)
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No. of Recommendations: 1
RockO says Jordan Air is popular.

Do you see any Skechers?
Around here, I see young folks and some mom/dad types with Skechers. I see 'coach' looking middle age men with UA footwear.

BUT! I don't go around staring at people's feet... so I might be unaware of popular footwear?

AND - Skechers is a 'low end' brand, while UA is high, and Nike covers the range, so the comparison is sketchy?

:-)
ralph
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BUT! I don't go around staring at people's feet... so I might be unaware of popular footwear?

My son is in high school. It is ALL about branded Nikes.
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Hi Helical:-)
I ate lunch at KFC yesterday, and took note of the tennis on the clientele... 1 teen with Nike (unbranded?), 3 teens with some thing I didn't recognize. Vans maybe? They looked generic.

The adults had apparently no name, no visible brand tennis.

Me? I had on some Merrills that I got cheap at Marshal's :-)

Data point of 1?
:-)
Ralph
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No. of Recommendations: 2
Do you see any Skechers?
Around here, I see young folks and some mom/dad types with Skechers. I see 'coach' looking middle age men with UA footwear.


I bought SKX as a play on aging boomers like myself with aching feet. They seemed to be marketing them that way a couple years ago (ads featuring Sugar Ray Leonard), but I don't they are so much now. They are easily the most comfortable shoes I've found for a bad ankle, with their wide base and cushy memory foam soles. Their durability is not great, however. But they sure feel good in the store when you first put them on. As far as being "cool"--it's hard to see them that way.
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I own sketchers and UA.

I think UA has a better brand. However I am invested in them both for there increasing international sales. These companies are becoming international companies. They are in slow/no growth mode domestically. I think the future is internationally for most companies. They both are value plays in my book.
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No. of Recommendations: 5
I bought it in spite of kelbon's and RockOYates's warnings. Now up 27.5%.

As they say, it's better to be lucky than smart.

Of course, what I should have bought is bitcoin. That would have been way smarter.
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"Plank killed his brand's street cred with his No. 1 spokeperson, Stephen Marbury, back in Februrary."

Curry
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