Under Armour: The beehive is alive
Today's Financial News - Posted October 27, 2009
Under Armour’s (NYSE:UA) latest earnings are out and shares are plunging. Last quarter’s figures were not bad, but investors are worried about the future. It is about time they listened to me.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): There are some companies that I just can’t write about without the threat of an inbox filled with “fan” mail. Investors love the company’s products or brand and they cannot stand when somebody presents facts that paint an even remotely bearish sentiment.
Sirius XM Radio (NASDAQ:SIRI) and its loyal legion of lunatic shareholders is one of these stocks. But sometimes I just cannot resist throwing a penny stick or two into the Sirius beehive. For a company lacking a queen bee, those folks sure are defensive.
Under Armour (NYSE:UA), based right here in Baltimore, is another. While the following is well short of cult-like, we all know people that believe those two well-branded letters – UA – should replace the “o” in god.
Good luck finding those folks today, however. With shares of the mother ship down by double-digit proportions, the shareholders willing to admit their ownership will be brimming with excuses.
Somehow, some way, somebody is going to blame the drop on me. After all, I’ve been saying stay away from this trap for all too long.
Who did it? Not me!
For those of you that are rational and open-minded enough to accept the truth, shares of the clothing and shoe maker are down today on word that the remaining three months of the year are likely going to be rougher than expected.
Dwindling sales and increased costs are going to contain the bottom line’s recent growth, eradicating the notion that the recent share price increase was, well, rational.
Now that the company’s third-quarter results are in and the expectations are trickling through Wall Street, there’s a good chance those shares that were selling for over $33 a couple of weeks ago could descend all the way back to the long-term rut right around $22.50.
During Under Armour’s third quarter, profits rose just 2% to $26.2 million.
I will be the first to admit any increase in profitability these days is cause for at least a light golf clap, but given the amount of branding headway the company has made over the last twelve months and the marketing money Under Armour has shelled out, a 2% rise is downright anemic.
It is like paying for a hedge fund and getting a CD rate of return. Not good.
Frankly, I do not know what else investors need to see or hear from this company to force them to realize their money is better invested elsewhere.
Under Armour is a great company, with great products. Do not get me wrong. But that does not mean it is a great stock.
There is a difference. In this case, it’s a big difference.
Next Article: TFN eNews 10/27/2009: Commodities shocker — 3 ways to gain as this energy resource collapses!
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October 27th, 2009 at 11:40 am
You may be right, but since February I’ve had a return of 400% on Sirius from its rock bottom…and about 70% with a investment in UA at the same time…CD returns?! I think not.
Do I hail they will rule the world? no. but both stocks have had awesome runs since last winter, so please quit your bitching like you’re saving us.
October 27th, 2009 at 7:06 pm
Yes, being a Sirius Xm fan & stock holder is the reason for a plea of insanity. You see, most of the stockholders like me are that because we love Satellite Radio! Know you shouldn’t bet w/ your heart, but many of millions of us have. Keep in mind that this is a company has its best days in front of it. It has come thru the most perfect of storms and lives to tell about it. When Sirius & Xm were two separate companies they beat each other to a pulp, then as a matter of survival Mel Karmazin the relatively new CEO of Sirius decides to call off the war and starts the process of trying to merge the two. Know these two already bloodied companies try and go thru this very tough process but have no idea what’s ahead. Between the FCC & DOJ it takes an unprecedented 18 months to get their blessing on the merger. During these 18 months it puts both companies in suspended animation while draining their coffers. Know comes the good news! Within a few weeks of the successful merger the economy goes into one of the worst tail spins since the great depression! Car sales plummet, which is their largest market of signing up new radio subscribers. So the company avoids bankruptcy with the help of John Malone’s Liberty Media and then the tide starts to turn. This company was down to it’s last nickel (that was it’s share price at the time this past Feb.) and know with new wind under its sails it starts to cutting the fat and not only cuts expenses from the aid of the merger but also opens up new markets so not to only rely on the auto industry. Know Sirius Xm is at about 60 cents and has been touted (even by some of its own critics) to be one of the companies to be in front of the pack to benefit when this economy comes around. This is a company w/ 18,000,000 subscribers has just scratched the surface so far. You see they are making a push to not only open up more markets domestically but with the aid of the internet and new devices (the newest coming out is the SKY DOCK) they will become more of an international player which could lead to hundreds of millions of subscribers. So if you have the opportunity to listen to Sirius Xm be careful, you will most likely see why most of its listeners own the stock. It’s the digital medium of the future!