Under Armour (UAA) Queued Up for Q1 Earnings: Factors to Note

Under Armour, Inc. UAA is likely to report a decline in the top line from the year-ago fiscal quarter’s reported figure when it reports first-quarter fiscal 2023 earnings on Aug 3, before the market opens. The Zacks Consensus Estimate for revenues stands at $1,342 million, indicating a dip of about 1% from the prior-year fiscal period’s reported figure.

The bottom line of this developer, marketer and distributor of apparel, footwear and accessories is also expected to decrease from the prior-year fiscal quarter’s reading. The Zacks Consensus Estimate of 3 cents for earnings per share in the fiscal first quarter has gone a penny down over the past 30 days. The figure suggests a sharp decline from earnings of 24 cents reported in the year-ago period.

This Baltimore, MD-based player has a trailing four-quarter earnings surprise of 103.8%, on average. In the last reported quarter, Under Armour’s bottom line missed the Zacks Consensus Estimate by a margin of 125%.

Key Things to Note

Under Armour’s results for the fiscal first quarter might have been hurt by the supply-chain impacts and higher shipping costs. Tough market conditions amplified by retail store closures and restrictions in China, and the related impacts have been weighing on UAA’s Asia-Pacific business for a while. Any deleverage in SG&A expenses coupled with inflationary pressures on freight and product costs, an unfavorable channel mix and adverse changes in foreign currency might have been added deterrents.

On its last earnings call, Under Armour anticipated the first half of fiscal 2023 to be largely affected by order cancellations and supply-chain delays. With respect to the fiscal first quarter, management had forecast revenues to be flat to down marginally from the prior-year period’s reading. This includes about 10 percentage points of headwinds from proactive reductions and cancellations due to COVID-related supply constraints. Also, higher freight expenses are likely to have stressed the gross margin for the fiscal first quarter to the tune of nearly 250 basis points. Management projected first-quarter earnings between 2 cents and 3 cents a share, suggesting a sharp decline from the prior-year period’s tally of 24 cents.

On the flip side, Under Armour’s robust operating model, strength in direct-to-consumer business and investments across product and marketing might have cushioned its quarterly performance. UAA’s strategy to focus on improving sales through product innovation, investments in its own stores, acceleration of e-commerce capabilities and selling more inventory at full price bodes well.

Sneak Peek Into Estimates

We note that the Zacks Consensus Estimate for Apparel and Accessories categories’ revenues for the fiscal first quarter is pegged at $892 million and $113 million each, indicating growth of 2.1% and 0.9%, respectively, from the corresponding year-ago fiscal period’s actuals. The consensus mark for Footwear stands at $324 million, suggesting a drop of 5.5% from the prior-year fiscal quarter’s reading.

The Zacks Consensus Estimate for revenues at North America and Latin America segments is pegged at $920 million and $46.7 million, respectively. These figures suggest an increase of 1.7% and 0.4% each for North America and Latin America from the comparable year-earlier fiscal quarter’s tallies. The Zacks Consensus Estimate for revenues of $195 million and $173 million for EMEA and the Asia-Pacific, respectively, suggests a corresponding decline of 5.8% and 9.9% from the year-ago fiscal period’s actuals.

What Does the Zacks Model Unveil?

Our proven model predicts an earnings beat for Under Armour this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Under Armour has a Zacks Rank #3 and an Earnings ESP of +1.05%.

3 More Stocks With Favorable Combination

Here are three other companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle:

Callaway Golf ELY has an Earnings ESP of +2.69% and a Zacks Rank #2 at present. ELY is likely to register increases in both the top and the bottom line when it reports second-quarter 2022. The Zacks Consensus Estimate for ELY’s quarterly earnings has been unchanged in the past 30 days at 42 cents per share, suggesting an increase of 16.7% from the year-ago quarter’s reported number.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Callaway Golf’s quarterly revenues is pegged at $1.10 billion, indicating a rise of 20.1% from the figure reported in the prior-year quarter. ELY delivered an earnings beat of 955.5%, on average, in the trailing four quarters.

Ulta Beauty ULTA currently has an Earnings ESP of +2.24% and is currently Zacks #2 Ranked. ULTA is likely to register a bottom-line improvement when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $4.84 suggests an improvement of 6.1% from the year-ago fiscal quarter’s reported figure.

Ulta Beauty's top line is expected to rise from the year-ago fiscal quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues stands at $2.20 billion, indicating an improvement of 11.7% from the figure reported in the prior-year fiscal quarter. ULTA has a trailing four-quarter earnings surprise of 49.8%, on average.

Costco COST currently has an Earnings ESP of +1.04% and a Zacks Rank of 2. COST is likely to register a bottom-line increase when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $4.08 suggests an increase of 4.6% from the year-ago fiscal quarter’s reported number.

Costco’s top line is expected to improve from the prior-year fiscal quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues is pegged at $71 billion, suggesting growth of 13.3% from the prior-year fiscal quarter’s reported figure. COST has a trailing four-quarter earnings surprise of 9.7%, on average.

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