Under Armour Valuation Analysis

Investment Valuation:
How a company is valued by the investors is a good indicator of its future growth prospects. One way to measure valuation of the company is through a Price-to-Earnings ratio. This is calculated by dividing the last closing stock price with the Earnings per Share. This ratio basically tells us how much an investor is willing to invest to earn 1 dollar from the company’s earnings. Currently, the P/E ratio for Under Armour is 95.82 which is staggeringly high. Nike is valued at a P/E ratio of 27.46 while Adidas is at 12.08 [Exhibit 6]. An extremely high P/E ratio means that investors value this company very highly and are willing to pay a high price for its share. It reflects positively on Under Armour’s growth prospects. This high price tag associated with Under Armour has come because of the explosive growth the brand has seen over the last 5 years.
Competitive & Strategic Analysis

Entering into an industry which requires high amount of
This means that Under Armour did not offer the historically valued attributes in its products but came up with unique attributes which created a niche for the brand and tapped into an unexplored market segment. This approach can be traced back to the inception of the brand when CEO Kevin Plank, frustrated with how sweat-soaked cotton T-shirts felt underneath sports gear, came up with the moisture-wicking technology. This was something revolutionary and Under Armour had created a business around something which no one else had recognized. Under Armour took the first step into the industry under the banner of innovation and changing perception. This meant that the competitors of the brand always had to play catch-up! Now, although all of its competitors sell the same technology, Under Armour benefitted from the first movers advantage and gained a significant share of this highly competitive market through the element of