Under Armour (NYSE: UA)
Generals: Undervalued Long-Term Brand Value
August 1, 2017
After eyeing UA for now months (I wrote it up back in December), I believe the time has come to begin averaging into the stock (I initiated a modest position into the opening plunge this morning) based purely on the long-term brand value. The financials are all over the place, with the Company revising 2017 revenue growth down to 10% and initiating a restructuring program; but the Nike- and Adidas-like 45%+ gross margin profile is indicative of tremendously valuable long-term brand. In a world awash in cheap debt, a globally under-penetrated brand such as UA is highly likely to receive strategic overtures – and I suspect so soon…
BRAND VALUE COMPS
According to Forbes, the Under Armour, Adidas and Nike brands are worth approximately $5 billion, $7 billion and $16 billion, respectively.
Enterprise comps: $8 billion, $48 billion, and $95 billion, respectively.
2017E sales comps: $5.3 billion, $26 billion, and $36 billion, respectively.