UAA at 0.60X P/E Might be Your Next Value Play Stock: Here's Why

Under Armour, Inc.  UAA is currently trading at a notable low price-to-sales (P/S) multiple, below the averages of the Zacks Textile – Apparel industry and the broader Consumer Discretionary sector. With a forward 12-month P/S of 0.60X, UAA is priced lower than the industry average of 2.22X and the sector average of 1.84X. UAA Looks Attractive From a Valuation StandpointImage Source: Zacks Investment ResearchIn the past month, UAA stock has lost 14.2% compared with the industry’s 5.2% decline. This has contributed to the company’s undervaluation and potentially made it more appealing to investors seeking attractive entry points to the sector.UAA Stock Past-Month PerformanceImage Source: Zacks Investment ResearchUnder Armour’s Strategic Transformation & Loyalty ProgramUnder Armour has transformed its direct-to-consumer (DTC) business, focusing on full-price sales and premium positioning. By reducing promotions and discounts, the company has boosted average unit retail and order values, strengthening brand equity and profitability.The company’s loyalty program has also witnessed significant growth, adding 4 million new members in the third quarter of fiscal 2025. This expansion brings the North American total to 17 million members, driving higher repurchase rates and greater brand engagement. Moreover, Under Armour’s flagship store in Baltimore serves as a testing ground for optimizing consumer experiences, with insights being applied across its 200 North American stores and nearly 2,000 global retail locations. A well-executed DTC strategy ensures higher margins, better customer engagement and sustained brand loyalty, setting a strong foundation for long-term growth.UAA’s Strong Gross Margin ExpansionUnder Armour achieved a 240-basis-point improvement in its gross margin in the fiscal third quarter, reaching 47.5%. This improvement was driven by a reduction in discounting within the DTC channel, lower product and freight costs, and favorable foreign currency fluctuations. By shifting away from deep discounting and emphasizing premium pricing, the company has optimized its revenue mix and strengthened profitability.These margin gains have exceeded expectations, leading Under Armour to revise its full-year gross margin outlook upward by 160 basis points, surpassing the previously estimated range of 125-150 basis points. This ability to enhance profitability despite revenue challenges demonstrates strong pricing power and brand resilience, reinforcing investor confidence in Under Armour’s long-term financial stability.UAA’s Revamped Marketing Strategy & International ExpansionUnder Armour’s marketing approach has evolved under the leadership of brand president Eric Liedtke, with a more targeted allocation of its $500-million marketing budget. The company is prioritizing grassroots programs, influencer collaborations and specialized media content to engage young team-sport athletes. The UA Next global program, featuring high-profile athletes like Antonio Rüdiger and Sacha Boey, has bolstered the brand’s presence in football (soccer), a sport with immense global reach.Internationally, Under Armour is refining its strategies to drive long-term growth. In EMEA, the company remains stable despite economic headwinds, with focused investments in key European markets. Meanwhile, in the Asia-Pacific region, Under Armour is reducing promotions, strengthening brand investments and optimizing its local-for-local strategy to stabilize and expand its market presence. As the company enhances its global operations, international expansion is set to become a crucial driver of revenue diversification and sustained profitability.Under Armour’s Optimistic Outlook for FY25Under Armour has adjusted its fiscal 2025 guidance with a cautiously optimistic outlook. The company anticipates a low-single-digit percentage decrease in adjusted selling, general and administrative expenses, a slight improvement from its previous expectations of a low to mid-single-digit decline. Additionally, adjusted operating income is now projected to be between $185 million and $195 million, an increase from the previously estimated $165-$185 million.Similarly, the company raised its adjusted earnings per share forecast to a range of 28-30 cents, up from the previously projected 24-27 cents. This revised guidance reflects Under Armour’s commitment to cost discipline, operational efficiency and strategic growth initiatives, which are expected to drive long-term shareholder value.Estimate Revisions Favoring UAA StockAnalysts have responded positively to Under Armour’s prospects, which has been reflected in upward revisions in the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the current fiscal year by three cents. The consensus estimate for earnings is pegged at 30 cents per share. The consensus estimate for earnings for the next fiscal year has been raised two cents to 38 cents per share.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Image Source: Zacks Investment ResearchConclusionInvestors may find Under Armour an attractive value play due to its low valuation compared with industry peers, making it an appealing entry point. The company has been undergoing a strategic transformation, focusing on premium pricing and strengthening its DTC business, all of which have improved profitability. Its loyalty program is also growing rapidly, leading to higher customer retention and engagement. Additionally, Under Armour’s successful marketing strategy, combined with international expansion efforts, is set to drive long-term growth. With strong margin improvements and positive earnings revisions, UAA has the potential for future returns. The company currently carries a Zacks Rank #2 (Buy).Other Key PicksSome other top-ranked stocks are Boot Barn Holdings, Inc. BOOT, Deckers Outdoor Corporation DECK and lululemon athletica inc. LULU.Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 levels. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently sports a Zacks Rank of 1.The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21.2% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It has a Zacks Rank of 2 at present. LULU delivered a 6.7% earnings surprise in the last reported quarter. The consensus estimate for lululemon’s fiscal 2025 earnings and sales indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 levels. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>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 Deckers Outdoor Corporation (DECK): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Under Armour, Inc. (UAA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks