FR: You Can’t Judge a Brand by Its Uniforms

compound annual growth rateArticle: You Can’t Judge a Brand by Its Uniforms

The first “Fool Revisited” piece this week covers a (former) favorite company of mine for the second time. I wrote about Under Armour (NYSE: UAA) previously and pointed out some of the reasons why my affection for the company was influenced by a friend. I decided to continue covering the company because I was enamored by Kevin Plank and his rocket to relevance versus Nike (NYSE: NKE), and a future article in this series will show just how well Mr. Plank has done for himself – at least at the time – on the back of the clothing company he started out of the trunk of his car at the University of Maryland.

Speaking of the University of Maryland (a school that made the short-list when I was deciding where to go to grad school), it was their Under Armour produced uniforms that inspired this article in the first place. In what has become a “thing” for all levels of sports – look at what the NBA did this season with their “city jerseys” – teams can no longer just simply have home and away jerseys. Maryland was no exception, and their initial offering of “special” uniforms was widely derided at the time back in the fall of 2011, including midweek tweets from then head coach Randy Edsell announcing the garish monstrosity the team would be wearing that weekend.

Here is an ancient tweet announcing the articles arrival to the world:

Under Armour has had some recent struggles, and it has fallen from its once lofty perch as growing threat to Nike. Using the compound annual growth rate (CAGR) and total growth since article publication on October 12, 2011 through February 9, 2018, both Nike and the S&P 500 have trounced the performance of Under Armour:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Under Armour $9.41 $13.75 6.17% 46.12% $14,612
Nike $21.07 $65.49 19.61% 210.82% $31,082
S&P 500 $1,194.89 $2,619.55 13.19% 119.23% $21,923

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

As we continue to look at Under Armour through various lenses over the course of this series, we may be able to identify why the company has had so many issues. However, thanks to stronger-than-expected quarterly results, the stock is up pretty dramatically today. Whether that ride continues will be something interesting to watch over the next few months, but I still don’t think Under Armour is a great place for new money at this point. Should this change in the near future, I will let you know.

Until next time…

Disclaimer: I do not own currently own shares in Under Armour, but I purchased shares on behalf of my mother within the last six months, which she no longer owns. I also have no plans to purchase shares within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s