Summary
- Under Armour has endorsement deals with two of the top scorers in the NBA.
- The new Curry 8 ranks high in the basketball footwear sector and has launched the Curry Brand on a great note.
- The stock has multiple expansion ahead as the company returns to profitable growth from selling premium products.
- This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Get started today ยป
Under Armour (UA, UAA) has surged higher recently following solid Q4 results and possibly some positive sentiment in the footwear segment from the NBA. The recent launch of the Curry Brand and invigoration of Steph's career could bolster sales in 2021 and beyond. My investment thesis remains very bullish on the stock even after topping $20.
Data by YCharts
NBA Boost
Don't look now, but Under Armour has two of the top NBA scorers under endorsement deals with signature basketball shoes. As of February 16, both Steph Curry and Joel Embiid are averaging nearly 30 points per game this NBA season.
Source: ESPN stats
Even Bradley Beal only has an endorsement deal with the Jordan Brand so the leading NBA scorers with signature shoes are both under contract with Under Armour. The big question is whether this ever translates into higher footwear sales.
In Q4, footwear sales were only $241 million, down 7% from 2019 levels. In comparison, Nike (NKE) does $6 billion in quarterly footwear sales and Under Armour is struggling to reach $1 billion in annual sales. The athletic apparel maker could double or triple footwear sales and the amount would still be a drop in the bucket to Nike.
Image Source: UA Q4'20 earnings release
Of course, Nike was built on footwear while Under Armour was built on performance athletic apparel, but the opportunity remains for the company to break into the large footwear category and grab billions in additional sales. The launch of the Curry Brand and the recent success of the Curry 8 basketball shoe should provide a big revenue boost this year. The Curry 8 grabs an 8.9 rating from The Hoops Geek site placing the shoe in the #4 position and far above the 8.3 rating of the Curry 7.
The company having multiple players under endorsement deals having great NBA seasons should provide a breakthrough for basketball footwear sales.
