Under Armour Or Nike: Which One Will Outrun The Other?

The sportswear, and especially athletic footwear market, is seeing a rapid growth with sales continuing to rise. However, among the two most prominent names in the category Nike Inc NKE and Under Armour Inc UA, which one should investors put their money in to profit from this growth?

Susan Anderson, FBR Capital Markets, was on CNBC recently to answer that question.

Strong Trends In Sneakers

"I think what's driving the strong sales trend here is the shift to athleisure and more casual dressing," Anderson began. "So, not just within performance sneakers, but we are also seeing casual-run, walk sneakers doing very well. And, I think, a lot of that's helping to drive these strong trends."

Under Armour Will Take Market Share

On Nike's dominance in the sneakers market, Anderson said, "Nike is obviously very established in the Footwear market. Under Armour is coming up and, I think, they will continue to take market share."

Under Armour: The Better Pick

Anderson was asked the reasons for why she is more bullish on Under Armour instead of Nike. She replied, "For Nike it's really more valuation, it's trading above its historical P/E multiple more like 20 times at 24 times right now. For Under Armour, we see much more runway for growth over the next 5 to 10 years, over the next 5 years we see continued high 20 percent low [of] 30 percent top-line growth and a lot of this driven by Footwear which they right now have very small market share in versus Nike."

"For Under Armour they have about 2 percent of the basketball footwear market share and just 5 percent or running versus Nike over 90 percent for basketball and about 60 percent for running. So, I think Under Armour has much more room to grow over the next 10 years," Anderson concluded.