Under Armour Stock Should Be on Your Pre-Holiday Shopping List

Athleisure apparel and footwear maker Under Armour NYSE: UAA stock has been retracing ahead of its upcoming Q3 2021 earnings. The iconic sports apparel maker had raised its full-year guidance in the prior earnings call but has since been calling off its peaks at $26.02 providing prudent investors with exposure opportunities. The Company has boosted its direct-to-consumer (DTC) business by beefing up its restructuring and digital transformation during the pandemic. The return of live sporting events and the reopening have caused a resurgence in its top and bottom line. The acceleration of the COVID-19 vaccination in the post-pandemic era is continuing to fuel double-digit growth. Athleisure, casual comfort, connected fitness, and the elastic office are products of a post-pandemic new normal. Under Armour is providing opportunistic pullback opportunities for prudent investors seeking exposure especially ahead of the holiday shopping season.

Fiscal Q2 2021 Earnings Release

On Aug 2, 2021, Under Armour released its fiscal second-quarter 2021 results for the quarter ended June 2021. The Company reported a diluted earnings-per-share (EPS) profit of $0.24, beating consensus analyst estimates for $0.06 by $0.18. Revenues grew 91% year-over-year (YOY) to $1.35 billion, beating analyst estimates for $1.22 billion. Wholesale revenues rose 157% to $768 million and direct-to-consumer (DTC) rose 52% YoY to $561 million. Under Armor CEO Patrick Frisk commented, "We are very pleased with Under Armour's better than expected second-quarter results, which reflect solid progress compared to both 2020 and 2019. Given the continued momentum, we're raising our full-year outlook, which puts us on track to achieving a solid performance in 2021. With the critical mass of our transformation behind us and the continued improvements across product, marketing, and our financial results, I believe this year sets a robust foundation that positions us well for our next chapter of profitable growth. At the halfway point of our fiscal year, I'm confident in our ability to execute our strategy by putting Focused Performers at the center of everything we do and increasing our capacity to drive consistent, profitable growth for our shareholders over the long-term."

Upside Full-Year Guidance

The Company sees full-year 2021 EPS between $0.50 to $0.52 versus $0.33 consensus analyst estimates. Full-year 2021 revenues are expected in the low 20% range versus high teens which ranges from $5.41 to $5.50 versus $5.34 billion. Gross margins are expected to rise between 50 to 70 basis points versus the prior expectations of 50 basis points.

Conference Call Takeaways

CEO Frisk set the tone, With sustained uncertainty related to COVID which as of late is trending unfavorably in key sourcing countries in Southeast Asia, the resiliency we've earned over the last year and a half will continue to serve as an asset while we navigate the second half of 2021. In this respect, we're focused on the things we can control, staying grounded in our four strategic pillars, strengthening the Under Armour brand, improving our operating model, amplifying a D-to-C focused approach, and increasing our capacity to return greater profitability across the company. Starting with strengthening our brand and the proactive decision we've made to reinvest some of this year's upside into additional marketing efforts, this flexibility is empowering us to amplify our middle to top of funnel activations geared at increasing awareness, attraction, and consideration for the Under Armour brand. As we work to connect with new athletes and inspire existing ones, we are centered on our brand attributes, resilience, hard work, heart, and edge. In the second half, this will come to light more holistically as we illustrate the journey to compete through the process of training, setting goals, struggling, and ultimately realizing the results.”

He continued, “Through a team sports lens supported by consistent messaging via the only ways through, our third quarter activations highlight the importance of mental strength, an often overlooked aspect of training and its relationship to unlocking an athlete's full potential. Certainly, coming out of a long stretch of COVID restrictions and as team sports hopefully open up more broadly this fall, we believe this is a timely effort to draw consumers into the psyche that is uniquely Under Armour as we work to make them better. So, starting this month via social media, TV, and streaming be on the lookout for Chase Young, Trent Alexander Arnold, Ty Harris, and Nick Markakis among others helping to highlight mental training and the role it plays in achieving one's personal performance goals. As we say at Under Armour if you train your mind you train your game. So while there's still more work to be done to unlock our full marketing potential, I am pleased with the progress we're making in aligning our go to market with focused performers and the evolving needs of our key retail partners around the world, not to mention the incremental marketing investments we're making in 2021 are really geared at setting us up for more strongly in 2022 as awareness and consideration should lead to increased conversion as we strengthen our connectivity.”

UAA Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for UAA stock. The weekly rifle chart has a breakdown with a falling 5-period moving average (MA) resistance just below the $21.53 Fibonacci (fib) level and 15-period MA near the $22.17 fib level. The weekly stochastic is falling at the 40-band. The weekly lower BBs are near the $17.67 fib. The daily rifle chart is been in a breakdown since triggering the daily market structure (MSH) sell trigger under $25.33. The 5-period MA has flatted at the $20.79 level as the stochastic bounce also stalls to set up a make or break. The daily market structure low (MSL) buy triggered on the bounce above $19.93, which the bulls need to defend. A daily mini pup can trigger a breakout towards the daily upper BBs at the $22.17 fib. Prudent investors can watch for opportunistic pullback levels at the $19.93 daily MSL, $18.45 fib, $17.67 fib, $16.29 fib, and the $15.41 fib level. Upside trajectories range from the $23.50 fib up towards the $28.32 fib.