The idea of underwear as a value investment is not as strange as you could think. Berkshire Hathaway (NYSE: BRK.B) owns an underwear maker’ the Fruit of the Loom Companies.
Hence, many people will wonder if long john and sportswear maker, Under Armour Inc. (NYSE: UAA) is a value investment. Notably, Mr. Market was paying $20.43 for Under Armour on 16 December 2019. Thus, Under Armour is cheap but popular.
In addition, Under Armour is making a little money. Under Armour reported a quarterly gross profit of $689.90 million on 30 September 2019. In addition, Under Armour reported an operating income of $132.84 million and a net income of $102.31 million on the same day.
How Much Money is Under Armour Making?
Conversely, Under Armour is generating less cash. Under Armour reported a negative operating cash flow of -$10.24 million on 30 September 2019. In addition, Under Armour had a negative ending cash flow of -$38.34 million on the same day.
Thus, Under Armour is burning cash and borrowing money to finance its operations. In fact, Under Armour reported a financing cash flow of $550,000 on 30 September 2019.
In total, Under Armour had $416.60 million in cash and short-term investments on 30 September 2019. In addition, Under Armour had total assets of $4.634 billion on the same day.
Under Armour reported quarterly revenues of $1.429 billion on 30 September 2019. In addition, Statista estimates Under Armour had global net sales of $5.19 billion in 2018. However, Under Armour’s resources are growing. In fact, Under Armour reported less than $1 billion in sales in 2009.
Is Amazon Driving Under Armour’s Success?
My guess is that the increasing popularity of Amazon (NASDAQ: AMZN) and other e-commerce sites is driving Under Armour’s growth.
Interestingly, Statista projects that Amazon will sell $52 billion worth of fashion goods by 2020. Plus, Statista estimates that Amazon’s share of the gross merchandise volume of online merchandise sold in the United States will grow from 45% in 2019 to 50% in 2021.
Finally, Amazon’s revenue grew by 23.69% in the quarter ending on 30 September 2019, Stockrow estimates. Thus Under Armour leverages the power of today’s greatest retail marketing machine.
Is Under Armour a Value Investment?
Hence buying Under Armour stock could be a cheap means of investing in Amazon.
In fact, Mar. Market priced Under Armour at $21.04 on 18 December 2019. In comparison, Mr. Market was paying $1,784.03 for Amazon (NASDAQ: AMZN) shares on 18 December 2019.
I do not like Under Armour (NYSE: UAA) stock because it pays no dividend. However, if you want a cheap stock that leverages Amazon’s marketing power, Under Armour is an interesting choice.