Deutsche Bank recently held a bull versus bear debate with an athletic sector expert. Here’s an overview of the bull and bear cases for Under Armour Inc UA 0.72%.
Bull Case
- The launch of Sportswear and location expansion could be catalysts for growth.
- Operating margin pressure is only a short-term issue, and there is room for margin expansion in the longer term.
- Under Armour has a wide open opportunity for international expansion.
- There is a huge opportunity for Under Armour in footwear.
- Q4 comps are relatively easy, and Sportswear, international growth and footwear could produce a strong quarter.
- High employee turnover is a normal part of the growth cycle.
- The stock’s valuation has always been high, but the company provides a unique global growth story.
Bear Case
- The core North American apparel business is cooling.
- Operating margins have been shrinking.
- Competition from Nike Inc NKE 0.23% and others is tougher outside of North America.
- Growth numbers seem more impressive than they are given the company’s small base.
- Under Armour is too depended on Steph Curry.
- Guidance is…
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