Stay Patient, Under Armour Investors; Your Time May Come Post-Q4 Earnings

Shares of Under Armour Inc UA UAA continue trading at multi-year lows due to near-term concerns surrounding the brand's fundamentals and external macro factors — and this creates a buying opportunity.

According to Baird's Jonathan Komp, Under Armour's stock now looks attractive relative to the company's growth profile, which includes an expected 20-percent revenue growth and 25-percent earnings per share growth after 2018.

However, now is not the time to be buying Under Armour's stock, the analyst cautioned. Specifically, the setup in the stock could improve after Tuesday's fiscal fourth-quarter earnings report, which may disappoint investors in certain areas.

Wait And Watch: Here's Why

For example, apparel was likely hurt by the warm weather start in the quarter along with lingering impacts from The Sports Authority bankruptcy. Meanwhile, the company's footwear revenue estimate (consensus of 37 percent versus 95 percent) is "aggressive," especially as sales of the Curry 3 shoe line appears muted.

Komp continued that investors should look beyond Tuesday's earnings report and focus on the various range of drivers ahead, including footwear innovation, a new partnership to sell at Kohl's Corporation KSS stores and its new Threadborne fabric. These initiatives should ease investor concerns about the company hitting its 2017 financial objectives.

"While we would wait until post-Q4 to be more aggressive, we believe the stock can work from current levels if UA proves an ability to deliver on current 2017 estimates," Komp concluded.

Image Credit: By Maryland GovPics - Under Armour Opening, CC BY 2.0, via Wikimedia Commons