Investment Thesis
Under Armour faces severe operational challenges with negative operating and net income despite flat revenue growth, indicating structural profitability issues beyond cyclical headwinds. While the company maintains positive free cash flow and adequate liquidity, the -31.5% ROE and -3.4% operating margin suggest fundamental business model stress that requires significant operational turnaround.
Strengths
- Positive free cash flow of $185.1M provides liquidity buffer despite losses
- Gross margin of 46.6% demonstrates pricing power and product quality in core business
- Current ratio of 1.43x indicates adequate short-term liquidity position
- Manageable debt-to-equity ratio of 0.69x provides financial flexibility
Risks
- Operating margin of -3.4% and net margin of -11.9% indicate fundamental unprofitability and operational inefficiency
- Stagnant revenue growth (0.0% YoY) combined with operating losses suggests inability to achieve profitable scale
- Negative interest coverage ratio of -3.5x indicates insufficient operating earnings to service debt obligations
- Quick ratio of 0.92x falls below 1.0x, raising concerns about ability to cover current liabilities with liquid assets
- Deteriorating net income performance (-186.7% YoY) demonstrates worsening profitability trajectory
Key Metrics to Watch
- Operating margin trend toward positive territory
- Revenue growth acceleration paired with cost structure improvement
- Free cash flow sustainability as operating losses may eventually impact liquidity
- Gross margin stability to confirm product demand remains intact
- Quarterly earnings trajectory for signs of operational turnaround
Financial Metrics
Revenue
3.8B
Net Income
-452.3M
EPS (Diluted)
$-1.06
Free Cash Flow
185.1M
Total Assets
4.6B
Cash
464.6M
Profitability Ratios
Gross Margin
46.6%
Operating Margin
-3.4%
Net Margin
-11.9%
ROE
-31.5%
ROA
-9.8%
FCF Margin
4.9%
Balance Sheet & Liquidity
Current Ratio
1.43x
Quick Ratio
0.92x
Debt/Equity
0.69x
Debt/Assets
69.0%
Interest Coverage
-3.48x
Long-term Debt
989.7M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-19T19:54:23.346330 |
Data as of: 2025-12-31 |
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