Analyzing Under Armour (UAA) and Carter’s (CRI)

Under Armour (NYSE: UAA) and Carter’s (NYSE:CRI) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Institutional and Insider Ownership

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33.7% of Under Armour shares are held by institutional investors. Comparatively, 97.5% of Carter’s shares are held by institutional investors. 16.4% of Under Armour shares are held by company insiders. Comparatively, 3.3% of Carter’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.



Volatility and Risk

Under Armour has a beta of -0.23, suggesting that its stock price is 123% less volatile than the S&P 500. Comparatively, Carter’s has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500.

Dividends

Carter’s pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Under Armour does not pay a dividend. Carter’s pays out 31.3% of its earnings in the form of a dividend. Carter’s has raised its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Under Armour and Carter’s, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Under Armour 16 15 3 0 1.62
Carter’s 0 4 9 0 2.69

Under Armour currently has a consensus target price of $14.46, suggesting a potential downside of 10.18%. Carter’s has a consensus target price of $119.83, suggesting a potential upside of 15.90%. Given Carter’s’ stronger consensus rating and higher probable upside, analysts clearly believe Carter’s is more favorable than Under Armour.

Profitability

This table compares Under Armour and Carter’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Under Armour -0.97% 4.17% 2.18%
Carter’s 8.90% 35.46% 13.81%

Valuation and Earnings

This table compares Under Armour and Carter’s’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Under Armour $4.98 billion 1.43 -$48.26 million $0.19 84.74
Carter’s $3.40 billion 1.43 $302.76 million $5.76 17.95

Carter’s has lower revenue, but higher earnings than Under Armour. Carter’s is trading at a lower price-to-earnings ratio than Under Armour, indicating that it is currently the more affordable of the two stocks.

Summary

Carter’s beats Under Armour on 13 of the 17 factors compared between the two stocks.

Under Armour Company Profile

Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. The company offers its apparel in compression, fitted, and loose types to be worn in hot, cold, and in between the extremes. It also provides various footwear products, including running, basketball, cleated, slides and performance training, and outdoor footwear. In addition, the company offers accessories, which include headwear, bags, and gloves; and digital fitness subscriptions, as well as digital advertising through MapMyFitness, MyFitnessPal, and Endomondo applications. It primarily offers its products under the UA Logo, UNDER ARMOUR, UA, ARMOUR, HEATGEAR, COLDGEAR, ALLSEASONGEAR, PROTECT THIS HOUSE, and I WILL, as well as ARMOURBITE, ARMOURSTORM, ARMOUR FLEECE, ARMOUR BRA, and UNDER ARMOUR CONNECTED FITNESS brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of brand and factory house stores, and Website. Under Armour, Inc. was founded in 1996 and is headquartered in Baltimore, Maryland.

Carter’s Company Profile

Carter's, Inc., together with its subsidiaries, designs, sources, and markets branded childrenswear under the Carter's, Child of Mine, Just One You, Precious Firsts, Simple Joys, OshKosh, Skip Hop, and other brands. The company operates through three segments: U.S. Retail, U.S. Wholesale, and International. Its Carter's products include baby products, such as bodysuits, pants, dresses, multi-piece sets, blankets, layette essentials, bibs, and booties; play clothes products comprising knit and woven cotton apparel; sleepwear products consisting of pajamas in cotton, fleece, and ploy-jersey; and other products, including bedding, outerwear, swimwear, footwear, socks, diaper bags, gift sets, toys, jewelry, cribs, paper goods, and hair accessories. The company's OshKosh brand products comprise playclothes products that include denim, overalls, woven bottoms, knit tops, bodysuits, and other playclothes for sizes newborn to 14. It also offers baby, sleepwear, outerwear, footwear, hosiery, and accessories under the OshKosh brand. The company distributes its products through department stores, chain and specialty stores, and discount retailers, as well as company-operated stores, and Websites. As of December 30, 2017, it operated 466 Carter's and 131 OshKosh stand-alone stores in the United States; 159 side-by-side and 74 co-branded stores in the United States; and 179 co-branded stores in Canada. The company was founded in 1865 and is headquartered in Atlanta, Georgia.

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