In a much anticipated event where Under Armour (UA, UAA) discussed long-term growth targets, the market was apparently disappointed with the updated 2023 projections. My bullish investment thesis has long held that the athletic apparel company was under-delivering on margins, and their updated business model actually reinforces that thesis despite the initial 10% dip in the stock.
The projections have a couple of key points. First and foremost, Under Armour is projecting a plan of returning to double-digit revenue growth by 2023. Second, the company projects that margins will increase, including a target of reaching double-digit operating margins by 2023. Third, the company projects annual free cash flows of $700 million by 2023 and cumulative cash flows of $2.5 billion ($500 million/year) over the five-year period.
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