Under Armour Gains 48% in 6 Months: How to Play the UAA Stock?

Shares of Under Armour, Inc. UAA have experienced a surge over the past six months. The stock has rallied 48.4%, comfortably outpacing the Zacks Textile – Apparel industry’s modest 6% growth. The company’s impressive growth can be attributed to its operational efficiencies, a focus on full-price direct-to-consumer (DTC) sales and enhanced brand image.The company’s commitment to product line refinement and a strong focus on international market expansion have enabled it to outperform both the broader Consumer Discretionary sector and the S&P 500 Index, which grew 11.3% and 10.3%, respectively, during the same period. Closing at $9.94 on Friday, UAA stock is moving toward its 52-week high of $11.89, attained on Nov. 7, 2024.Image Source: Zacks Investment ResearchMoreover, Under Armour has shown solid upward momentum, currently trading above its 200-day and 50-day simple moving averages (SMA), which are key indicators of price stability and long-term bullish trends. In Friday’s trading session, UAA surpassed its 200-day SMA of $7.62 and 50-day SMA of $8.65. This technical strength, coupled with continued momentum, signals positive market sentiment and growing investor confidence in UAA's financial health and growth potential.Image Source: Zacks Investment ResearchUAA’s Strategic Evolution: Premium Growth & Global ExpansionUnder Armour is undergoing a strategic transformation to redefine its product portfolio, enhance brand perception and drive long-term growth. By focusing on premium offerings, targeted promotions and innovative customer engagement, the company is positioning itself to capture new opportunities in the competitive athletic apparel market.The company is recalibrating its product offerings to better balance performance and style while reducing SKU complexity. These changes aim to shift Under Armour’s product line toward premium categories, with a strong emphasis on better and best products. Moreover, Under Armour is adopting a more targeted promotion approach at its Factory House outlets. By excluding certain key items from store-wide discounts, the company is improving profitability while maintaining the allure of exclusivity for premium products.The company’s global reach continues to expand through high-profile athlete endorsements, including Stephen Curry’s successful promotional tour in China and the upcoming launch of De’Aaron Fox's signature shoe. These partnerships amplify Under Armour’s visibility, particularly among younger consumers, further solidifying its position in the global sportswear market.Furthermore, investments in DTC channels, including a flagship store at its new headquarter, strengthen brand affinity and premium positioning. By shifting away from heavy discounting, the company has seen a rise in e-commerce full-price sales, now accounting for 50% of online revenues. Under Armour is focused on elevating its retail experience with a cleaner, more curated product assortment and presentation. The flagship store, opening on Nov. 21 in Baltimore, will showcase this premium concept and serve as a model for future locations.Under Armour's loyalty program is seeing significant growth, with nearly 13 million members in the United States alone, after adding $6 million to existing ua.com members in the second quarter. Active members now represent about half of the company's U.S. DTC revenue, with member accounts generating approximately 50% more revenue per consumer and nearly doubling the 90-day repurchase rate compared to non-members.Under Armour Projects Strong FY25 GrowthUnder Armour maintains an optimistic outlook for fiscal 2025, projecting a gross margin expansion of 125-150 basis points, an improvement from the previous forecast of 75-100 basis points. This growth is attributed to reduced promotional activity in DTC channels and favorable product costs. Adjusted SG&A expenses are anticipated to decline by a low-to-mid single-digit percentage, while adjusted operating income is expected to be $165-$185 million, up from the earlier estimate of $140-$160 million. Adjusted earnings per share are forecasted between 24 and 27 cents, compared with the prior range of 19-21 cents. Also, the fiscal third-quarter gross margin is predicted to increase 150-175 basis points, supported by supply-chain efficiencies, favorable foreign exchange and reduced discounting.Estimate Revisions Favoring UAA StockIn the past 30 days, analysts have raised their estimates for the current fiscal year by 5 cents. The consensus estimate for earnings is pegged at 27 cents per share. Also, the consensus estimate for the next fiscal year has also been raised 4 cents to 35 cents per share. Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Image Source: Zacks Investment ResearchConclusionInvestors may consider UAA stock due to the company's impressive recent performance and growth prospects. Under Armour’s strategy of refining its product offerings, particularly in premium categories, and expanding its international reach through strategic athlete partnerships has contributed to its solid market position. The company’s focus on profitability, including cost controls and increasing gross margins, signals a healthy financial outlook. With strong technical momentum, evidenced by UAA trading above key moving averages, coupled with positive analyst revisions, the stock reflects increasing investor confidence in the company’s future earnings potential and sustained growth. The company currently sports a Zacks Rank #1 (Strong Buy).Other Key PicksOther top-ranked stocks include Abercrombie & Fitch Co. ANF, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.ANF delivered a 16.8% earnings surprise in the last reported quarter. The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 64.2% and 13.2%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently carries a Zacks Rank #2. The consensus estimate for Gildan’s current financial-year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2. The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.2% and 13.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>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 Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report Under Armour, Inc. (UAA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks