Under Armour (NYSE:) had a remarkable day in the market as its stock soared by 19%. The athletic apparel company has been undergoing restructuring efforts, and it seems to be paying off.
In its first quarter of fiscal 2025, Under Armour reported earnings that exceeded analysts’ expectations. While revenue was down by 10% to $1.2 billion, it was better than the anticipated 13% decline. The company also managed to achieve a net income of $4 million, or 1 cent per share, on an adjusted basis, surpassing projections for an 8 cent per share adjusted net loss.
Making Progress With Restructuring
Under Armour recently brought back founder Kevin Plank as president and CEO to lead the company through its restructuring plan. The company has been focusing on expense reductions and operational efficiencies to improve its financial standing.
During the second quarter, Under Armour saw a 6% decrease in adjusted expenses, excluding one-time litigation reserves and restructuring costs. The company also successfully reduced its inventory by 15% year-over-year to $1.1 billion, leading to improved gross margins and cash position.
Additionally, Under Armour executed a $500 million stock buyback plan by repurchasing $40 million in stock in the quarter. These efforts have been crucial in driving efficiencies and reducing promotional activities.
Improving Outlook
Despite the challenges, Under Armour has updated its fiscal 2025 guidance, expecting slightly better revenue and improved margins. The company anticipates adjusted operating income to be between $140 million and $160 million, with adjusted earnings per share projected to fall between 19 cents and 22 cents.
Although Under Armour stock is still down 9% year-to-date, today’s significant gain signals potential for further growth. With a low P/E ratio of 12 and a PEG ratio under 1, the stock is considered undervalued.
Investors should keep an eye on Under Armour’s progress in the coming quarters as it continues its restructuring efforts. The stock has the potential for modest upside if the company can sustain its positive momentum.
Original Post: Here’s Why Under Armour Stock Is Up 19% Today