TO:
CEO Kevin Plank
FROM:
Junior Analyst Paul Dimmer
CC:
Professor Quincey Johnson
DATE:
December 2, 2013
SUBJECT:
Under Armour is Growing Significantly Faster than its Competition
Founded only 17 years ago, Under Armour, Inc. (Under Armour) has grown to be one of the
most well known and popular athletic apparel companies in the nation today and is out growing
its top competitor Nike, Inc. (Nike). We chose to compare Under Armour with Nike because of
their similarities in products. Both companies are well known for their high quality athletic
apparel and shoes. Also, Nike is one of the most successful companies in the world today and a
comparison will evaluate how Under Armour compares to the number one company in its
industry. While Nike is a much larger company in terms of size and numbers, Under Armour is
continuing its fast growth since being founded in 1996. The two companies are being compared
in terms of stock prices, net income, total revenue, earnings per share (EPS), and price-earnings
ratio (PE Ratio). Currently, the stock price only differs by about two dollars a share. Nike’s
Total Revenue and Net Income are much higher than Under Armour over the past three years,
but with a growth rate of more than double that of Nike, Under Armour will continue doing well
in the future. Also, the EPS of Under Armour falls short of Nike, but its PE Ratio is double that
of Nike. Each of these five indices will be discussed in further detail.
Under Armour Stock Outgrowing and Outperforming Nike
Throughout the last year, Under Armour stock has grown and Nike stock has declined. Under
Armour managed to increase its stock price by 54.1% over the last year as Nike took a step in the
wrong direction with its stock decreasing by 18.9% over the same period (Stock, Under Armour
2013, Stock, Nike 2013). Figure 1 below shows the growth and decline of Under Armour and
Nike stock over the past year. Following Figure 1, Net Income and Total Revenue are compared
among the two companies, where Nike exceeds in the present, but Under Armour is growing
toward the future. Dates are as follows (Adjusted Close Price according to Yahoo Finance):
 One Year Ago: 12-3-12
 Six Months Ago: 6-3-13
 Present Day: 12-3-13
Under Armour vs. Nike Growing Stock
100
90
$97.56
$81.11
Dollars 80
$63.06
70
60
$79.13
$52.64
$61.75
50
One Year Ago
Six Months Ago
Present Day
Under
Armour
Nike
Figure 1-Under Armour and Nike Stock
(Stock, Under Armour 2013, Stock, Nike 2013).
Under Armour Net Income and Revenue Growth Notably Larger Than Nike
The next areas of comparison between Under Armour and Nike are their Net Income and Total
Revenue from their past three years, where Nike shows a large advantage in numbers due to
being a larger company, but Under Armour shows a large advantage in growth. Nike increased
Net Income by $352 million, a 16.5% increase and Total Revenue by $5 billion, a 25.8%
increase (Income, Nike 2013). Over the same three years, Under Armour has increased its Net
Income by $60 million, a 88.1% increase and Total Revenue by $770 million, an 72.5% increase
(Income, Under Armour 2013). At this pace, Under Armour will be a strong company for years
to come. Nike’s large Net Income may affect the equation for EPS, resulting in a higher EPS
than Under Armour, which is discussed along with PE Ratio’s of the two companies below.
Under Armour’s PE Ratio Doubles Nike, Nike’s EPS Doubles Under Armour
In the final points of comparison, Earnings per Share and Price-Earnings Ratio, Under Armour
and Nike split the two indices with each having a distinct advantage in one. Nike holds the
advantage with an EPS of 2.96, over double that of Under Armour EPS of 1.38 (EPS/PE Ratio,
Under Armour 2013, EPS/PE Ratio, Nike 2013). This shows that Nike EPS is greatly affected
by its large Net Income and massive company size. On the other hand, Under Armour has the
advantage with a PE Ratio of 59.57; more than double that of Nike’s PE Ratio of 26.84 (EPS/PE
Ratio, Under Armour 2013, EPS/PE Ratio, Nike 2013). As a result of the 32.73 difference in the
PE Ratio, Under Armour expects a higher earnings growth in the future which can easily help
attract investors. Table 1 below compares the two companies EPS and PE Ratio. Figures in the
table below are according to Yahoo Finance.
Company
Earnings Per Share
Price-Earnings Ratio
Under Armour
1.38
59.57
Nike
2.96
26.84
Table 1-EPS and PE Ratio, Under Armour vs. Nike
(EPS/PE Ratio, Under Armour 2013, EPS/PE Ratio, Nike 2013)
Works Cited
EPS/PE Ratio, Nike. (n.d.). NKE: Summary for Nike, Inc. Common Stock- Yahoo!
Finance. Yahoo! Finance. Retrieved December 3, 2013, from
http://finance.yahoo.com/q?s=NKE
EPS/PE Ratio, Under Armour. (n.d.). UA: Summary for Under Armour, Inc. Class A
Comm- Yahoo! Finance. Yahoo! Finance. Retrieved December 3, 2013, from
http://finance.yahoo.com/q?s=UA
Income, Nike 2013. (n.d.). NKE Income Statement | Nike Inc. Common Stock - Yahoo!
Finance. Yahoo Finance - Business Finance, Stock Market, Quotes, News.
Retrieved from http://finance.yahoo.com/q/is?s=NKE+Income+Statement&annual
Income, Under Armour 2013. (n.d.). UA Income Statement | Under Armour Inc.
Common Stock - Yahoo! Finance. Yahoo Finance - Business Finance, Stock
Market, Quotes, News. Retrieved from
http://finance.yahoo.com/q/is?s=UA+Income+Statement&annual
Stock, Nike. (n.d.). NKE Historical Prices | Nike, Inc. Common Stock Stock - Yahoo!
Finance. NKE Historical Prices | Nike, Inc. Common Stock Stock - Yahoo!
Finance. Retrieved December 3, 2013, from
http://finance.yahoo.com/q/hp?s=NKE&a=00&b=1&c=2012&d=11&e=6&f=201
3&g=d&z=66&y=0
Stock, Under Armour. (n.d.). UA Historical Prices | Under Armour, Inc. Class A Comm
Stock - Yahoo! Finance. UA Historical Prices | Under Armour, Inc. Class A
Comm Stock - Yahoo! Finance. Retrieved December 3, 2013, from
http://finance.yahoo.com/q/hp?s=UA&a=00&b=1&c=2012&d=11&e=6&f=2013