How to Buy Under Armour Stock • Pros, Cons & More • Benzinga


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Under Armour, one of the most recognizable athletic apparel companies in the world, sponsors Steph Curry, Tom Brady, Bryce Harper, and Jordan Spieth. The firm also affiliates itself with many NCAA athletics programs. You can’t watch a game without seeing an Under Armour advertisement or an athlete sporting the memorable logo. Despite this world recognition, Under Armour came from very humble beginnings. In fact, the whole idea for this multi-billion dollar company came from a Maryland fullback in the early 1990s.

What Is Under Armour?

In 1995, Kevin Plank had a problem. He was a fullback and special teams captain for the University of Maryland, but he had no issues with his playing time. His real issue was the shirts he wore under his uniform for practices and games, which remained sweat-soaked while he played. He noticed that his uniform compression pants somehow managed to remain dry, even while the rest of him was soaked.

Under Armour
Source: UnderArmour.com

Plank’s observation led him to develop shirts similar to his football shorts, made from moisture-wicking fabric.

He took it a step further.

The prototype was made of synthetic microfibers that kept even the hardest-working athletes dry and cool. After maxing out his credit cards, he drove all over the East Coast to market his shirts. Plank had blown through $60,000 and had only $17,000 in sales. His office was in his grandmother’s basement. Plank fiercely believed in his product and finally got a major sale in 1996 when the Georgia Tech Yellow Jackets asked for new gear.

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Word traveled quickly, but Under Armour’s biggest break came in 1999. Any Given Sunday is a must-see movie for every football fan, but it also served as a launch point for Under Armour. After seeing the gear worn by stars like Jamie Foxx and LL Cool J, Plank took out an advertisement in ESPN The Magazine and soon had more sales volume than the previous three years combined. Over $750,000 in sales was generated, and Plank finally had his dream business.

Sales success continued for the company and it announced an initial public offering (IPO) for November 2005.

History of Under Armour stock

Under Armour locked up deals with not only pro and college football leagues, but Major League Baseball and the National Hockey League as well. An IPO was scheduled for November 18, 2005 and Under Armour began trading that day at $13 per share. It quickly doubled, making it the first stock in over five years to double on its first day of trading.

History of Under Armour stock
Source: StockCharts.com

The $13 share price went to $26 on that first day and quickly reached $40 by the beginning of 2006. Shares continued to do well in 2006 and 2007, but like most stocks, Under Armour got a hefty haircut during the Great Recession and nearly dropped below its IPO price in February 2009.

The recovery was strong and the stock rebounded, reaching new highs in February of 2011. After undergoing splits in 2012 and 2014, the stock reached its most recent all-time high of $54.81 on September 17, 2015. Then, the company did something a little unusual. After a 2016 stock split, Under Armour investors received two different types of shares.

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The original shares were rechristened Class-A shares (UAA) and retained their voting rights. But the newly split-off shares were classified as Class-C (UA) and did not have such rights. The market didn’t appreciate this financial maneuver and both UAA and UA saw significant declines in the following years. Both stocks trade around the $20 mark today.

Pros and cons of Under Armour stock

Despite the recent stock declines, there’s still a good case to be made for Under Armour stock. Here’s a few reasons to buy, or not to buy.

Pros of Under Armour stock

1. Stable superstar athlete sponsorships

You won’t find a more impressive list of athletes than the one Under Armour has under sponsorships. Steph Curry is a three-time NBA champion, Bryce Harper is a six-time MLB all-star, Tom Brady is the greatest quarterback to ever live and Jordan Spieth has won multiple major PGA tournaments. Cam Newton, Julio Jones, Lindsey Vonn, Clayton Kershaw and Taylor Hall all have deals with the company, too.

2. All kinds of expansion

Under Armour doesn’t just make moisture-wicking shirts anymore. The company offers outerwear such as jackets and hoodies, along with footwear, pants, hats and equipment. The company has also expanded internationally, which has opened paths to new markets.

Cons of Under Armour stock

Under Armour investors might want to consider:

1. Intense competition

Under Armour competes with two entrenched adversaries with deep pockets, Nike and Adidas. Both companies have similar moisture-wicking apparel, so the quest to innovate continues.

2. Poor fundamentals

The stock is still expensive, with a forward P/E over 124 and sales have slowed, recently forcing the company to lay off 400 employees. Inventory seems to build at a rate that makes analysts uneasy and many consider sports apparel to be a small niche market.

How to buy Under Armour stock

If you’ve decided to add Under Armour to your portfolio, follow these steps to complete the transaction

  1. Determine how much you want to invest

    The first step in any stock purchase is deciding how much money you’re willing to invest. Figure out how much of your portfolio to devote to Under Armour stock before talking to a brokerage.

  2. Choose between UAA and UA

    Under Armour has two different classes of common stock: Class A (UAA) are shares with voting rights, while Class C (UA) are not.

  3. Choose a brokerage and place your offer

    Under Armour shares cannot be purchased straight from the company, so you’ll need to buy shares with a brokerage account. If you don’t have a brokerage, consult our list of the best online brokerages. Then, locate shares using your account and make your purchase with either a market order or a limit order. Here are a few of our favorite online brokerages.

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Best Brokers to Buy Stocks

Final thoughts

Under Armour has developed a terrific product, but athletic wear is still seen a niche market and stiff competition from Nike and Adidas won’t be going away. Still, the company is branching out into different markets and rebound opportunities exist in the future.

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