Margins to Shrink Even More at Under Armour

This past weekend I was able to experience first hand what is going on at Under Armour’s stores. I must mention that the store I visited was not an outlet store but a regular one inside a big mall.

I happened to be in the Grapevine area in Texas where the Gaylord Texan Resort is located. My thirteen year old daughter had a competition and I decided to take her. So I was naturally able to scout the area in search for clues on how the company is doing.

I started by visiting Dick’s Sporting Goods and to my surprise the store was somewhat empty (meaning no customer traffic) and you couldn’t find many discounts around. I gave my wife the opportunity to look for one item that she likes (she takes yoga classes so I knew she was going to look for some pants or tops), after looking around she settled on some yoga pants but not from Under Armour, it was Nike’s and paid full retail price on them ($63.99). I, on the other hand, got myself an Under Armour cap for which I also paid full retail ($25…

Under Armour's Deteriorating Financials

SummaryRevenue growth has decelerated considerably.Margins continue to shrink.Operating Income is almost non existent now. Under Armour's (UA, UAA) revenue as reported in their 10K for 2017 showed signs of deceleration and margins shrinkage causing their financials to deteriorate. Revenue stopped improving while their COGS (Cost of Goods Sold) and SG&A (Selling, General & Administrative Expense) continued their upward trend.
This all started in 2015 when the Total Revenue of the company started to decelerate. From an impressive 32.25% increase in 2014 to a marginal 3.15% in 2017. But, who can blame a company increasing its revenue at double digits per year? It wasn't until 2017 that the company apparently found its peak. 
COGS as % of Revenue also is showing signs of stress. In 2017 the company reported that for every $100.00 dollars in revenue it had to spend $55.02 to produce or buy the merchandise and services they sell. When in the past it was as low as $50.98 of e…

Under Armour Prepares To Increase Leverage Ratios

It is well known that leverage is good, or at least that's what we think when it comes to managing the finances of a company or even in real estate. The more we use other people's money to increase our wealth the better. However, given the position that Under Armour., Inc. (UA, UAA) is in right now it may be signaling a distressed balance sheet in the near future. 
The company has come from having a somewhat conservative stance when it comes to debt-to-equity ratio in 2013 at a 49.77%, to being aggressive in 2017 at 98.47% , to being desperate in 2018 where it was announced in their 10K filing that "In February 2018, we amended our credit agreement to increase our permitted leverage ratio during certain quarters in 2018".
It is true that in the filing doesn't specify what type of leverage ratio they were talking. Nevertheless, taking a look at the Shareholder's Equity and comparing it with the Current Liabilities and the Total Liabilities we can see that it …

Capstone Turbine (Nasdaq:CPST) High-Risk / High-Reward

Capstone Turbine Corp (Nasdaq: CPST)

This company has been in the business of developing, manufacturing and marketing microturbine technology solutions for a wide range of businesses around the world. Put in simple words, they make turbines to create clean energy relying very little in fossil fuels to do so. You can visit their website to read more of them.

I started following this company about 2 years ago when the price of the stock was about $1.00 or so. I didn't buy there because to me it was too risky and the down potential was far bigger than making money on it. No the company is trading double that price and it is starting to gain traction.

As you can see on their Income Statement posted on Yahoo Finance, the company has been increasing the sales every year for the past three and it looks just as good on this year. A recent video post on You Tube about Walmart introducing a new type of truck (18 wheeler) that will reduce emissions and improve efficiency made me look back a…

J.C. Penney's 3Q 2013 Results - My Opinion.

Today, November 20, 2013 JC Penney announced its third quarter results with a press release followed by a conference call before the markets opened for business.

Overall, I believe that it was good news for the longs (such as myself). However, skepticism is still hanging in there as the material results were disappointing and the only good news are the trends that seem to be improving but are yet to show on the quarterly results.

As promised, I will give you, what I believe are the most important things from the conference call and quarterly results for your review.

Mike Ullman the CEO mentioned that "the turnaround for J.C. Penney is beginning to take hold"He also said that during the third quarter "we began generating positive sales momentum". Nevertheless, those positive sales trends are not yet materialized and reflected into this quarter results.Margins on sales are not yet improving. In fact, they are deteriorating based on the same period last year. The only …

Getting Ready for JC Penney's Earnings Release

It has been almost a year since I started following JC Penney and their turnaround effort. I have to admit that supporting them back then was just a little too early and I have paid the price, losing close to half of my original investment on shares of this company.

Having said that, I still think this company can and will be turned around. Though I still think some of the changes that Ron Johnson introduced are good for the company (e.g. uncluttered stores), It is also true that taking away the coupons were a major mistake that resulted in a precipitated decline on sales. Now that Mike Ullman is back on the reign and coupons have been reinstated I think customers will come back.

JC Penney is scheduled to release earnings this upcoming Wednesday, and based on the latest events and releases from the company, I expect it to give positive news that will give the stock a much needed boost and at the same time scare some short sellers away from it.

I will listen to the conference call and…

Thank You Veterans!

I want to take this opportunity to thank all veterans of the United States military for their sacrifices and service to this great country. Without them, our freedom (which many don't even think of) will not be possible. Also, thanks to all the veterans families, friends and relatives who also had to endure watching their loved ones go away for some time and in some cases forever.

It is only fair that we take the time to remember and honor those who have risked everything and in some cases lost so much in order for all of us to enjoy our freedom.

Dear Readers!

Please take the time to say thanks to a veteran today! It is important for them to know we care and appreciate what they did.

Adrian Gomez.