Under Armour slides 10% despite market-beating results: how come?

Under Armour Inc (NYSE: UAA) on Friday reported market-beating results for its fiscal fourth quarter. The stock still slipped 10% after the sports equipment company warned the impact of COVID-related supply constraints could be bigger than previously estimated.  

Highlights of the Q4 earnings report

Under Armour said its net income printed at $109.7 million that translates to 23 cents per share. In the comparable quarter of last year, it had posted $184.5 million in net income or 40 cents per share.

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On an adjusted basis, the company that manufactures footwear, sports and casual apparel earned 14 cents per share. At $1.529 billion, Under Armour noted an annualised growth of 9.0% in its quarterly revenue.

According to FactSet, experts had forecast 14 cents of adjusted EPS on $1.469 billion in revenue. Under Armour noted a 15% growth in Q4 revenue from North America and a 3.0% increase internationally.

Guidance for the transition period

Last year, the U.S. firm said it’s moving the end of its fiscal year from December 31^st to March 31^st. For the transition period from January 1^st to March 31^st, the NYSE-listed company raised its guidance for a 5.0% increase in revenue on up to 3 cents of EPS.

Its outlook for revenue assumes a 10% hit from the COVID-related supply constraints. FactSet has not compiled a consensus for the three-month transition period. In the earnings press release, CEO Patrik Frisk said:

As we navigate ongoing uncertainty, going forward, I’m confident that we’re running a strong company – one that’s able to deliver sustainable, profitable growth and value creation for our shareholders over the long-term.

Last month, Baird said UAA could climb to $32 a share – an 80% increase from here.