Gearing Up for Under Armour Earnings

Question: What do Gisele Bundchen, my teenaged nephews and investors have in common right now?

Answer: they can't get enough of sportswear maker Under Armour.

The company is scheduled to report second-quarter 2015 earnings on July 23 before the market open, and I wanted to take a look at what's been going on over there ahead of time.

First off, let's look at the shares, which are pretty much popping like popcorn as merchandise flies off the shelves. July 13 marked a new high as the stock touched $89.46, and shares have been on a winning streak for quite a while now. Phalguni Soni of Market Realist recently noted that the company's first-quarter 2015 earnings marked the 20th straight quarter with 20% or higher revenue growth.

The brand's intense popularity isn't surprising to my sister-in-law, who first bought Under Armour for her now-teenaged son a few years ago. Under Armour's ability to create a lightweight product that maintains heat was a major fascination and draw for her. Plus, every kid was asking for the clothes after their favorite athletes wore them on the field. The only sting for her came at checkout time because, let's be honest, a $90 shirt for one kid can make any parent flinch a tad. The good news is that he wore it practically everywhere (except to church, I think).

But kids aren't the only ones sporting workout-inspired clothes outside the gym and off the field. The "athleisure" space is growing, and it currently presents something for everyone, including investors. Year-to-date, Under Armour is up over 30%, while a close competitor, Nike, is up nearly 18%. Lululemon Athletica, another major player in the space, is up over 13%. Many a woman's uniform I see while I'm out and about includes a pair of Lululemon pants, and I'm pretty sure at least some of these women aren't headed to or from the yoga studio. Other noteworthy players in the space include Gap with Athleta, and actress Kate Hudson with Fabletics What makes Under Armour a hot brand right now for UBS analyst Michael Binetti and team is the trek into global territoriesundefined. In a note on July 9, the team writes, The team rated the company Neutral in the report.

Not everyone shares the enthusiasm. Morningstar's Paul Swinand most recently ranked the company one star out of five with a fair value estimate of $45.

Even so, the brand continues to innovate and this isn't lost on consumers or analysts. Last week, it launched an ad campaign for a new sports bra lineup featuring the likes of dancer Misty Copeland, skier Lindsey Vonn and model Gisele Bundchen. Hayley Fitzpatrick of Business Insider believes this move makes it a "huge threat" for Lululemon and L Brands' Victoria's Secret division.

"With this new, highly publicized collection," writes Fitzpatrick, "Under Armour is likely going to surge to the forefront of the activewear industry at a time when it's booming in popularity." Sam Poser and team of Sterne, Agee CRT agree. In an update on the company following the launch, Under Armour is the team's top pick for long-term growth investors. They see the company poised, "for revenue compound annual growth rate of at least 22% over the next five years ($10 billion by 2020)." Poser, et al, write, His team rated Under Armour Buy with a $95 price target in the note.

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