Financial Analysis: Under Armour (NYSE:UA) and NIKE (NYSE:NKE)

NIKE (NYSE:NKE) and Under Armour (NYSE:UA) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Valuation & Earnings

This table compares NIKE and Under Armour”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NIKE	$46.40 billion	1.16	$3.11 billion	$2.09	17.32
Under Armour	$4.97 billion	0.42	-$495.64 million	($1.15)	-4.18

NIKE has higher revenue and earnings than Under Armour. Under Armour is trading at a lower price-to-earnings ratio than NIKE, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for NIKE and Under Armour, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NIKE	6	21	9	1	2.14
Under Armour	2	1	0	0	1.33

NIKE presently has a consensus target price of $49.09, suggesting a potential upside of 35.61%. Under Armour has a consensus target price of $5.50, suggesting a potential upside of 14.46%. Given NIKE’s stronger consensus rating and higher probable upside, equities analysts plainly believe NIKE is more favorable than Under Armour.

Risk & Volatility

NIKE has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Under Armour has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500.

Institutional and Insider Ownership

64.2% of NIKE shares are held by institutional investors. Comparatively, 36.3% of Under Armour shares are held by institutional investors. 1.1% of NIKE shares are held by insiders. Comparatively, 15.6% of Under Armour shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares NIKE and Under Armour’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NIKE	6.70%	16.54%	6.21%
Under Armour	-9.99%	4.04%	1.37%

Summary

NIKE beats Under Armour on 13 of the 15 factors compared between the two stocks.

About NIKE

NIKE, Inc., together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services worldwide. The company provides athletic and casual footwear, apparel, and accessories under the Jumpman trademark; and casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks. It also sells a line of performance equipment and accessories comprising bags, sport balls, socks, eyewear, timepieces, digital devices, bats, gloves, protective equipment, and other equipment for sports activities under the NIKE brand; and various plastic products to other manufacturers. In addition, the company markets apparel with licensed college and professional team, and league logos, as well as sells sports apparel; and licenses unaffiliated parties to manufacture and sell apparel, digital devices, and applications and other equipment for sports activities under NIKE-owned trademarks. It sells its products to footwear stores; sporting goods stores; athletic specialty stores; department stores; skate, tennis, and golf shops; and other retail accounts through NIKE-owned retail stores, digital platforms, independent distributors, licensees, and sales representatives. NIKE, Inc. was founded in 1964 and is headquartered in Beaverton, Oregon.

About Under Armour

Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth. The company provides its apparel in compression, fitted, and loose fit types. It also offers footwear products for running, training, basketball, cleated sports, recovery, and outdoor applications. In addition, the company provides accessories, which include gloves, bags, headwear, and sports masks; and digital subscription, advertising, and other digital business services. It primarily offers its products under the UNDER ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, UA Logo, ARMOUR FLEECE, and ARMOUR BRA brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour retail stores, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of 439 Brand and Factory House stores, as well as through e-commerce websites. It operates in the United States, Canada, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. Under Armour, Inc. was incorporated in 1996 and is headquartered in Baltimore, Maryland.