UA

Athletic apparel retailer Under Armour (click ticker for report: ) reported solid-third quarter performance Thursday morning. Revenue grew 24% year-over-year to $575 million, in-line with consensus estimates. Earnings increased 23% year-over-year to $0.54 per share, a few cents better than consensus expectations. Gross-margin pressured eased, as margins increased 30 basis points year-over-year to 48.7%. Inventory builds finally alleviated, falling 2% year-over-year to $312 million. Though CEO Kevin Plank cited sourcing issues and “outgrowing” suppliers, we think the company is cleaning up its balance sheet and realized it had far too much inventory on the books. The firm knows how reliant it is upon weather for winter quarter sales, so we like its cautious stance going into winter this year to … Read more

Athletic retailer Lululemon reported fantastic earnings and issued upwardly revised guidance. We like the company, but not the shares at current prices.

We dig into why we think the market is overly optimistic about Under Armour, but there are plenty of reasons why we’re not re-establishing a put position on the athletic apparel company at this time.

Though shares of the athletic-clothing retailer have stumbled today, we think the firm’s lower-than-anticipated guidance is not material to its long-term intrinsic value.