We came across a bullish thesis on Under Armour, Inc. (UA) on Twitter by MattJMcClintock. In this article, we will summarize the bulls’ thesis on UA. Under Armour, Inc. (UA)’s share was trading at $7.63 as of Dec 23rd. UA’s trailing and forward P/E were 12.98 and 31.75 respectively according to Yahoo Finance.
withGod/Shutterstock.com
Under Armour (UA) is quietly emerging as a promising turnaround story, challenging investor narratives that prioritize Nike (NKE) and Lululemon (LULU). Following its Q2 2025 earnings, the company has articulated a clear pathway to reinvigorate its brand, products, and financial performance. Under Armour’s strategy hinges on a product inflection slated for Fall/Winter 2025, with signs of progress expected beforehand. Kevin Plank, Under Armour’s founder, has emphasized delivering “proofs of life” in advance, supported by the recent introduction of a 9-month speed-to-market capability alongside the traditional 18-month calendar. This enhancement, demonstrated by the StealthForm hat launched in April 2024, positions the company to release innovative, relevant products more efficiently.
The addition of John Varvatos as Chief Design Officer in late 2023 underscores Under Armour’s commitment to stylistic innovation, a crucial factor for reinvigorating its men’s apparel and footwear lines. Varvatos’ influence is expected to materialize fully with Fall/Winter 2025 launches, but interim product drops in early 2025 could offer glimpses of what’s to come. Notably, Under Armour is also concentrating on premium distribution channels such as Dick’s Sporting Goods (DKS) and Nordstrom (JWN) for apparel and Foot Locker (FL) for footwear, ensuring its innovations reach the right audience. Updates to key products like SlipSpeed and the Infinite running series further reflect the brand’s strategic shift toward higher-quality, lower-price-point footwear—a move that differentiates it from competitors like Nike.
Operationally, Under Armour has made significant strides in cleaning up its business. The company has reduced promotional activity and wholesale markdowns, leading to a healthier inventory position and improved gross margins, which increased in Q2 2025. Full-price sales now represent 50% of e-commerce revenue, up from 30% a year ago, signaling stronger brand equity and disciplined inventory management. Factory outlet strategies have been refined, with certain products excluded from blanket discounts, and off-price channel sales have decreased, reflecting the company’s focus on value preservation. Encouragingly, management has raised FY25 gross margin guidance, pointing to sustained momentum despite remaining inventory clearance needs in the second half of the year.
Under Armour’s renewed emphasis on marketing aligns with its strategic reset. The company plans a significant campaign for 2025, coinciding with major sporting events like the NBA All-Star Game. The addition of Eric Liedtke, a seasoned marketer, adds credibility to these efforts. Under Armour’s commitment to targeted, flexible marketing represents a departure from its previous long-term structural contracts, enabling more agile and effective spending. The $40 million incremental marketing investment planned for the second half of 2025, partially reinvested from Q2 upside, reflects management’s confidence in the brand’s potential.
Looking ahead, Under Armour is positioning itself to achieve 10%+ EBIT margins, a realistic target given its ongoing structural improvements and gross margin expansion opportunities. Reduced promotional reliance, higher direct-to-consumer sales, and more efficient segmentation are expected to drive profitability. While skepticism remains about segmentation gains, the groundwork laid by management suggests the company is poised to capitalize on its investments. If Under Armour successfully executes its strategy, it could reclaim its position in the athletic apparel market and deliver meaningful upside to investors, making it an underdog worth watching.
Under Armour, Inc. (UA) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held UA at the end of the third quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of UA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.