A Summary and Technical Analysis of the Under Armour, Inc. Essay

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Pages: 6

Under Amour, Inc. is a performance based apparel company that is quickly growing to become one of the top companies in the industry. They are known for high-quality, innovative products that are giving athletes a competitive advantage. This paper describes the history of the company, analyzes the company’s performance and required rate of return, discusses the projected future growth rate of earning, values the company, and provides a recommendation to buy stock at the estimated price target of Keywords: stock analysis, return on equity, projected future growth rate, required rate of return, intrinsic value A Summary and Technical Analysis of the Under Armour, Inc. (UA) Stock on the New York Stock Exchange Under
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Under Armour, Inc. is continuously working to create new products, expand into new segments (most recently, footwear and accessories), improve their current lines, and increase brand awareness. The company’s growth plan now focuses on success in the international market. Return on Equity (ROE) is a profitability ratio that compares net income to average shareholders’ equity. The ROE shows how efficient management has been in utilizing the shareholders’ investment. In the case of Under Armour, Inc. the ROE has been fairly consistent for the past five years, an average of 15.03% and a standard deviation of 1.9 for the five year period. The ROE was at a minimum of 11.64% in 2009, grew steadily to its maximum of 17.37% in the end of 2011, and has declined slightly since. UA currently has a ROE of 16.96%, which is close to the industry average but places the company in the top twenty percent. The ROE is also important in projecting growth. It is used to calculate the substantial growth rate, which is the maximum amount of growth that you can expect without changing the financial leverage. The projected earnings growth for a company is another important figure to consider. According to the NASDAQ website, the projected P/E growth rate for UA is 26.33% for 2014. As we see quite often with this company, these numbers are higher than the industry average of 14%. Earnings growth for the