Under Armour (UA) Shares Soar 533%! Is It Time To Go Short?July 4 | Posted by Kevin Monaghan | Top Story
Under Armour (UA) shares have had a spectacular bull run from about $12.50 to the current $79.23 (up 533%). Can the run continue… maybe? However we’re starting to think the upside potential is getting ahead of itself. The company releases its quarterly earnings report this month and while they will show year over year growth, it probably won’t be enough to convince investors of its lofty valuation.
The stock is currently trading with a whopping P/E ratio of 55.9. That’s a lofty valuation for a company that has seen negative comments from analysts recently, including notes that merchandisers marking down Under Armour shoes trying to get rid of them.
Under Armour was a big hit with athletic consumers, who opened their wallets for higher end moisture-wicking synthetic fabrics that are designed to regulate body temperature and enhance performance regardless of weather conditions. However, success breeds competition, and this competitor happens to be a global powerhouse who responded brilliantly: Nike (NKE). Nike posted great numbers recently and has continued to play “catch-up” very well when it comes to competing with Under Armour. Nike would probably thank Under Armour for opening its eyes to the demand for higher end workout clothes. Shareholders are certainly enjoying Nike’s higher revenues.
So, How Would We Trade Under Armour Today? With A Short Sale.
We’re not alone in feeling that it may be a good time for investors to take profits. Insiders have been selling shares of Under Armour (UA) this year as 6 insiders have sold about $8 million dollars worth of shares.
Disclosure: Author, Kevin D. Monaghan, Senior Partner at Elite Investment Group, has no position in the above mentioned companies.