Under Armour Stock Is Down Over -50%... Is It Time to Consider?

For disclosure purposes, I am personally long Under Armour (UAA) stocks and looking to add to my current position on another leg lower. I am down approximately -15% in my current position. The stock itself is down over -50% in the past 12-months, perhaps trending lower and is the single worst performer in the S&P 500. The company and its stock have come up in a lot of private conversations as of late and I thought it might be worth passing along what I know and what I've heard. To begin, the fundamentals have been extremely negative. The company had a huge Q4 earnings miss and dismal guidance for Q1. From the data I have seen, revenue rose by +12% annually to $1.3 billion, but that missed estimates by $100 million and was much lower than the +20% growth the company had been posting the past six-years. The setbacks are said to be due to more competitive pressure in the space from Adidas and others who have been winning some market share. There are also headwinds being created by inventory management expenses and currency complications. There's some talk on the street they made a few big buying mistakes as they've tried to gain more market share in the more high-end and "professional fashion" athletic wear space. There's also arguably been a few flops with a couple of their new shoe releases. This is important to understand since Under Armour started growing aggressively their revenue streams have shifted a bit. Their apparel revenue now account for about 67% of its top line, footwear revenue now accounts for over +20%, and accessories revenue accounts for about 9%. This means Under Armour's dependence on footwear has risen over the past few quarters, which is troubling because it's forced the company to compete more aggressively against shoe giants like Nike and Adidas. Both of these companies have taken a much more proactive approach to defending their market share and in fact seem somewhat prepared to "do whatever it takes" to defend their turf. Margins in the footwear space are being pressured as the giants battle it out. Many now argue that for Under Armour to promote new products and find more growth they will have to continue boosting their sales and marketing expense. Rember they are already paying huge money for young super stars like the NBAs Steph Curry; NFLs Tom Brady, Cam Newton, Julio Jones, Brandon Marshall; MLB's Bryce Harper, Clayton Kershaw, Buster Posey, Dee Gordon; Swimmer Michael Phelps; Tennis Andy Murray; Golfs Jordan Spieth, todaysetc... There were also some big ripples across this group and amongst other influential professional athletes when CEO and founder Kevin Plank called Donald Trump a “real asset to the country” during a February television interview, ultimately drawing some disagreement and harsh remarks from key partners in professional sports. I personally found it sad that the stock took a heavy hit on Planks comments in support of Trump, today's world of algorithmic trading it only takes few negative tweets or responses from some of your high profile athletes endorsers to spark a wave of negative comments and sell pressure. Now the questions becomes can Under Armour stop the bleeding? I'm personally willing to bet in the long-run the stock will again find more favorable footing and is worthy of a longer-term look. Lets not forget Under Armour was founded by a feisty Kevin Plank. After finishing up college in 1996 as a so-so linebacker for the University of Maryland, he rounded up his savings of $17,000, which he made while selling roses, and started a business out of his grandmother's house. While playing sports through the years Plank had become frustrated by his sweat-soaked cotton T-shirts' and the inability to keep him dry and comfortable. He searched for a synthetic material that would wick the sweat from his body. He tried several prototypes before deciding on the one he wanted to use. He then asked his former teammates to try on the shirts, claiming that his alternative to a cotton T-shirt would help their on field performance. As his friends and acquaintances moved on to play professionally, he would send them T-shirts, requesting that they pass them out to other players in their locker rooms. Within just a few years his new company Under Armour was doing millions in sales. In 2003, Under Armour's first television advertisement featured a football squad huddled around Plank's former University of Maryland teammate Eric Ogbogu, shouting “we must protect this house”. The phrase became a sales slogan and battle cry for Under Armour. In 2010 the company's revenues reached $1 billion. I've read so many research pieces on this stock the past few weeks my head is spinning. There are experts saying the stock is a "buy" and experts saying the stock is a "sell" with still more downside in its future. I certainly don't have a crystal ball, but I'm willing to make a small wager that a guy who started a multi-billion dollar business on a shoestring, that has since changed an entire industry, has a few more tricks up his sleeve and a whole lot of fight left in his soul. Yes, they have clearly stumbled and their "growth" is now in question, but in the long-haul, I suspect their brand will remain popular amongst our nation's youth. Hence the reason I like owning on the deeper breaks in valuation... As of this writing, Under Armour "A class" shares UAA were trading just above $19 per share. "C class shares" UA were trading just under $18 per share. I personally own the "Class A" UAA shares. As always make certain you clearly understand all the risk associated with any stock or option purchase and discuss your specific risk tolerance and strategy with your licensed advisor.