Is Kevin Durant Right About Under Armour Shoes? (NYSE:UA) (NYSE:UAA)

- September 7, 2017

In an episode of Bill Simmons’ “The Ringer”, Kevin Durant proclaimed that young basketball players don’t like Under Armour Inc (NYSE:UA) (NYSE:UAA) shoes. He even went so far as to say that storied programs like the University of Maryland was unable to land top prospects because of the school’s deal with Under Armour, and that shoe companies have a real big influence on where kids go. The bottom line, according to Durant, “Nobody wants to play in Under Armours.”

Kevin Durant is one of Nike’s biggest endorsers, so it is no shock the former NBA MVP has such strong opinions about Under Armour. Furthermore, with UA stock down 60% since April of last year and Under Armour’s footwear revenue posting its first ever year-over-year decline, it’s not difficult for Durant to bash the company.

After all, Under Armour does not look like much of a threat. As seen in the above chart, Under Armour’s last quarter footwear revenue of just $236.9 million hardly compares to the $5.5 billion that Nike Inc (NYSE:NKE) created in the same calendar quarter. Not to mention, Nike grew footwear revenue by 7.7% vs the same period last year.

That said, The HADE Platform’s value/growth investment grade analysis recently found similarities between Under Armour’s recent struggles and that of Nike in the 1990s at a similar point in its business cycle. HADE also predicted that after a dismal year in 2017, Under Armour will make a respectable comeback in 2018.

With international revenue expected to decelerate and apparel revenue growth to remain stable, Under Armour’s footwear business is expected to drive future growth. Therefore, Kevin Durant may very well eat his own words in the very near future, as demand for teammate Steph Curry’s new shoe is showing far more positive momentum than his last. We conclude that now is a good time to be long UA stock.

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