Under Armour’s (NYSE: UA) success over the years has been driven primarily by the company’s business outside North America. Although North America is Under Armour’s biggest segment, growth in this region has slowed down in the last couple of years due to the restructuring plan undertaken by the management. Asia has led the company’s growth story over the previous few years. Asia has not only accounted for a bulk of the company’s growth over the last few years but has also been the largest manufacturer of Under Armour’s goods. Trefis highlights the importance of its Asia business for Under Armour in an interactive dashboard. Additionally, you can modify any of our key drivers to gauge the impact changes would have on Under Armour’s valuation in a separate dashboard.
#1. Asia’s Contribution To Under Armour’s Revenue Has Steadily Increased Over The Years
#2. Asia’s Revenue Growth Has Comfortably Outpaced Under Armour’s Total Revenue Growth
#3. Notably, the growth of Under Armour’s competitors in Asia has been lower, ranging from -18% to 15%
Data around the revenue growth of competitors Gap, Tapestry, and Ralph Lauren is available in our interactive dashboard.
#4. Asia Segment Has Also Been Operating At A Higher Margin
#5. Finally, Asia-Pacific Region Manufactures A Bulk Of Under Armour’s Products
To sum things up, Asia is not only the company’s fastest-growing segment but also the company’s manufacturing hub. Asia has been the company’s largest growth driver and is expected to remain so. With Under Amour’s largest region, North America, struggling, Asia remains key to Under Armour’s growth prospects in the coming years. Moreover, the continued development of the Asian middle class and the rise of per-capita income will further aid the company’s growth in the region.
Starting with our forecast for Under Armour’s revenues as detailed above, we estimate the company’s adjusted EPS for full-year 2020 is to be around $0.13. Using this figure with our estimated forward P/E ratio of 130x, this works out to a price estimate of $17 for Under Armour’s stock, which is roughly 10% ahead of the current market price.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.