Investment Thesis
Under Armour is in financial distress with flat revenue growth, deeply negative profitability (-10% net margin), and negative free cash flow of -$162.2M despite a healthy 45.5% gross margin, indicating severe operational execution challenges. The company is burning cash while unable to achieve operating leverage, creating an unsustainable capital structure.
Strengths
- Gross margin of 45.5% demonstrates product pricing power and brand strength
- Current ratio of 1.62x and $309.2M cash provide near-term liquidity runway
- Debt-to-equity ratio of 0.84x is moderate relative to industry leveraging
Risks
- Operating income of -$163.1M represents structural profitability failure despite $5B revenue scale
- Negative free cash flow of -$162.2M is unsustainable and constrains strategic flexibility
- Zero YoY revenue growth with declining net income (-146.3%) indicates competitive pressure and execution deterioration
- $1.2B long-term debt combined with negative cash generation creates refinancing and solvency risk
- Negative interest coverage of -3.1x means operating income cannot service debt obligations
Key Metrics to Watch
- Operating cash flow trajectory toward positive territory
- Revenue growth rate inflection (current 0% YoY unacceptable)
- Operating margin improvement path and SG&A expense reduction
- Cash burn rate and runway before liquidity stress
- Debt refinancing needs and covenant compliance through 2027
Financial Metrics
Revenue
5.0B
Net Income
-495.6M
EPS (Diluted)
$-1.16
Free Cash Flow
-162.2M
Total Assets
4.4B
Cash
309.2M
Profitability Ratios
Gross Margin
45.5%
Operating Margin
-3.3%
Net Margin
-10.0%
ROE
-35.0%
ROA
-11.2%
FCF Margin
-3.3%
Balance Sheet & Liquidity
Current Ratio
1.62x
Quick Ratio
1.08x
Debt/Equity
0.84x
Debt/Assets
68.0%
Interest Coverage
-3.08x
Long-term Debt
1.2B
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: 2026-05-20T07:18:33.522561 |
Data as of: 2026-03-31 |
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