Morningstar

Under Armour Earnings: In-Line Results Overshadowed by Dismal Near-Term Guidance

We expect to reduce our fair value estimate and raise our Uncertainty Rating of Under Armour stock.

A detailed view of the Under Armour logo on the goal post.
Maria Lysaker/UFL via Getty
Securities in This Article
Under Armour Inc Class A
(UAA)

Key Morningstar Metrics for Under Armour

What We Thought of Under Armour’s Earnings

Under Armour’s UAA fiscal 2026 first-quarter revenue fell 4%, while gross and adjusted operating margins rose to 48.2% (up 70 basis points) and 2.2% (up 150), respectively. However, the firm expects sizable second-quarter margin declines on a 6%-7% drop in sales and higher tariff and marketing costs.

Why it matters: Under Armour’s ongoing transformation since Kevin Plank returned as CEO remains unproven and is further challenged in the short run by tariffs and soft demand for sportswear. The shares fell about 20% on Aug. 8 and are approaching lows as investors have lost confidence.

  • First-quarter sales and margins nearly matched our forecast. Sales fell 5% in North America (59% of total) but rose 10% (above our 8% estimate) in Europe, the Middle East, and Africa (22%), where the business transition is further along. Adjusted EPS of $0.02 was just $0.01 shy of our forecast.
  • However, due to tariffs and expected weak North America wholesale orders, the second-quarter outlook is poor. Guidance for $30 million-$40 million in adjusted operating income and adjusted EPS of $0.01-$0.02 is far short of our respective $171 million and $0.29 estimates.

The bottom line: We expect to reduce our $14.50 fair value estimate for no-moat Under Armour’s shares by a mid-single-digit percentage. Even so, we think there is a long-term opportunity as the firm’s brand-focused merchandising and marketing moves lift its prices, margins, and sales.

  • Although specific full-year guidance was not provided, Under Armour suggested that the second quarter would be the bottom in terms of sales declines. We project a return to sales growth and margin gains in fiscal 2027 and model 8%-9% long-term operating margins.
  • We intend to change our Uncertainty Rating to Very High from High based on our quantitative model and Under Armour’s consistent underperformance.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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