Columbia Sportswear Company (COLM), Under Armour Inc (UA), VF Corp (VFC): A Tough Competitor Means Cold Cash for You

With its proprietary fashion technologies, Columbia has advantages over VF Corp (NYSE:VFC) like its Omni-Freeze Zero, which works with your own sweat to cool you down. CEO Boyle has said building up warm weather business is key. The company rolled out its largest advertising campaign ever to support Omni Freeze.

Rival Under Armour Inc (NYSE:UA)’s  main demographic is competitive athletes and weekend warriors. It has an outdoors recreational segment, but Columbia remains the go-to-brand for the seriously outdoorsy.

At over thrice the trailing P/E, at 62.30 to Columbia’s 18.83, a price to sales ratio of 4.0, more than triple Columbia’s 1.20, and no yield, Under Armour Inc (NYSE:UA) isn’t cheap.

Under Armour Inc (NYSE:UA)’s sales growth has been impressive at a five year rate of 23.64%, better than Columbia’s 5.94% and V.F. Corporation’s 8.46%. Analysts expect a five year earnings-per-share growth rate of 20.68% compared to Columbia’s 8.20% and V.F. Corporation’s 11%.

Under Armour Inc (NYSE:UA)’s trailing net profit margin is 6.62% to Columbia’s 6.40%, but the back half of the year should expand margins at Columbia. Under Armour Inc (NYSE:UA)’s third quarter when college and high school sports start in earnest is their most profitable historically. Both pale in comparison to V.F. Corporation’s trailing profit margin of 10.21%.

Finally, Columbia has the lowest price to free cash flow at 18.50 to Under Armour’s 117.50 and V.F. Corporation’s 27.60.

A tough decision
Columbia’s management is strongly aligned with shareholders offering yield and no debt. Overseas expansion in India and China along with Omni-Freeze are breakout catalysts.

Under Armour Inc (NYSE:UA) isn’t cheap. A third quarter disappointment could tackle the stock. V.F. Corporation is a good choice as a big cap retailer with higher yield, reasonable valuation, and decent margins, but doesn’t have Columbia’s catalysts.

The article A Tough Competitor Means Cold Cash for You originally appeared on Fool.com is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Under Armour. The Motley Fool owns shares of Under Armour.

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