Under Armour Valuation

UTD SMIF Student Research

This report is published for educational purposes only by students competing in the CFA Institute Research Challenge.

Apparel, Footwear & Accessories

Under Armour, Inc.

Recommendation: HOLD Price Target: $61-70.50

10/30/2013

Ticker: UA (NYSE) Price: $81.46

Earnings/Share Mar. Jun. Sept.

Dec.

Year

P/E Ratio 46.2x 42.9x 46.0x 60.9x

2010 2011 2012 2013

$.07 $.12 $.14 $.07

$.03 $.06 $.06 $.16

$.34 $.44 $.54 $.68

$.22 $.30 $.47 $.52(est)

$.67 $.92 $1.21 $1.43(est)

Highlights

Recommendation Our recommendation of a “Hold” is supported by a weighted average of two valuation models – Discounted Cash flow to Firm, and Comparable Multiples. Revenue Drivers Revenue growth has been stellar for the past several years, with a current run of thirteen straight quarters of revenue growth > 20%. Additionally, there are good reasons to be optimistic for further growth as Under Armour has yet to expand globally, as they plan to do in the near future. Qualitative Factors Proven success in “branding” their product. Under Armour is more than just athletic wear, it is a known, recognizable product with its own identity

GIS Daily Stock Price

Market Profile

52 Week Price Range Average Daily Volume Beta Dividend Yield (Estimated) Shares Outstanding Market Capitalization Institutional Holdings Insider Holdings Book Value per Share Debt to T otal Capital Return on Equity 44.32-86.02 1,366,780 1.5 na 105527 8.44Billion 76% 7.80% 7% 18%

$60 $50 $40 $30 $20 $10 $0

CFA Institute Research Challenge

10/30/2013

Investment Summary

Our HOLD recommendation is based on a combination of valuation metrics, including Discounted FCFF and Comparable Companies models. Through this analaysis, we calculate a weighted value of $61-$70.50 per share, a considerable discount to the current share price (as of 11/1/13, the common share price was $81.15). Under Armour continues to post superior year-over-year revenue growth and...