UAA 6.67 (+2.46%)
US9043111072Manufacturing - Apparel & AccessoriesApparel Manufacturing

Last update on 2024-06-05

Under Armour (UAA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Under Armour's 2023 Piotroski F-Score analysis reveals financial performance based on profitability; liquidity; leverage; score: 4/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Under Armour (UAA) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
0
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score evaluates a company based on 9 criteria: profitability, liquidity, and operating efficiency. Under Armour (UAA) has a Piotroski Score of 4, which indicates a moderately weak financial position. Key highlights include: (1) Profitability: Positive net income ($386,769,000) earns 1 point, but negative cash flow from operations (-$9,914,000) means no point. An improvement in ROA garners 1 point, but lower operating cash flow than net income results in 0 points. (2) Liquidity: Decline in leverage adds 1 point, but a slight decrease in the current ratio earns 0 points. Share dilution also earns 0 points. (3) Operating Efficiency: Decreased gross margin results in 0 points, but increased asset turnover earns 1 point.

Insights for Value Investors Seeking Stable Income

Under Armour (UAA) has a Piotroski Score of 4, which suggests a mixed financial outlook. While there are positives, such as positive net income and improved asset turnover, concerns like negative cash flow and declining gross margins raise red flags. Investors should exercise caution and possibly look for more financially robust stocks with higher Piotroski Scores before investing. Understanding the specific reasons behind the issues, such as negative cash flow and share dilution, is essential. For a safer investment, consider stocks with a score of 7-9.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Under Armour (UAA)

Company has a positive net income?

The net income criterion evaluates whether a company has generated positive profit in the most recent fiscal year. This indicates financial health and operational efficiency.

Historical Net Income of Under Armour (UAA)

Under Armour (UAA) has posted a net income of $386,769,000 for the year 2023. This is a positive figure, which earns the company 1 point on the Piotroski Scale. Analyzing historical data, this positive net income reflects a significant recovery from previous years where the company faced negative net income, notably -$549,177,000 in 2020. The consistent recovery over the years signifies improving operational performance and business turnaround, marking this trend as highly favorable for Under Armour.

Company has a positive cash flow?

Cash Flow from Operations (CFO) examines if a company's regular business operations generate sufficient cash.

Historical Operating Cash Flow of Under Armour (UAA)

Under Armour's CFO for 2023 is -$9,914,000, which is negative. This indicates that the company did not generate enough cash from its business operations, failing to achieve a positive cash flow. When compared to the past two decades, Under Armour has experienced fluctuating levels of CFO, with notable positive cash flows particularly between 2009 and 2021. However, the negative CFO in recent years reinforces the need for Under Armour to review and perhaps revamp its operational strategies. In the context of Piotroski analysis, this would mean adding 0 points.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures how effectively a company generates profit from its assets year over year.

Historical change in Return on Assets (ROA) of Under Armour (UAA)

Under Armour (UAA) has demonstrated an improvement in its Return on Assets (ROA) from 0.0472 in 2022 to 0.0831 in 2023. This upward trend, registering a change of 0.0359, is commendable as it underscores the company's increasing efficiency in leveraging its assets to generate earnings. Over the past 20 years, the industry median ROA consistently outshines Under Armour's metrics. For instance, in 2023, the industry median ROA stands at approximately 0.5464—significantly higher than Under Armour's 0.0831. The company still lags behind its industry peers, but the current uptrend indicates strategic improvements. Hence, Under Armour scores 1 point for this criterion.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow should ideally be higher than the Net Income. It signifies that a company is generating sufficient cash from its core activities to sustain and grow the business.

Historical accruals of Under Armour (UAA)

For the year 2023, Under Armour's Operating Cash Flow was -$9,914,000, while the Net Income stood at $386,769,000. This analysis translates to an unfavorable trend as the Operating Cash Flow is significantly lower than the Net Income. The coming years may see potential volatility if this trend continues. With accrued data showing an indicative range from -0.1773 to 0.2182 over the past-two decades, current figures of -0.002 do not compensate for the reduction inconsistency. Hence, this criterion receives a score of 0.

Liquidity of Under Armour (UAA)

Leverage is declining?

Change in Leverage refers to the company's Debt-to-Equity ratio, highlighting its financial solvency. Lower leverage indicates reduced financial risk.

Historical leverage of Under Armour (UAA)

In 2023, Under Armour's leverage was 0.2842 compared to 0.3012 in 2022, indicating a decrease. This trend is favorable as it reflects an improvement in financial stability. Historically, except for fluctuations during 2012-2020, leverage remained reasonably controlled. Thus, this decrease suggests effective debt management. Therefore, Under Armour earns 1 point for this criterion.

Current Ratio is growing?

The change in current ratio compares the company's current liabilities to its current assets to gauge liquidity.

Historical Current Ratio of Under Armour (UAA)

Under Armour's (UAA) current ratio has slightly decreased from 2.1815 in 2022 to 2.1812 in 2023. Despite being a marginal change, this results in a 0 point according to Piotroski analysis criteria. Historically, Under Armour's current ratio has been stable. For instance, the ratio peaked in 2005 at 3.8133 and was comparable to the industry median which stood at around 2.3583 during that year. In contrast, the industry median for the current ratio in 2023 was 1.64, showing that Under Armour is above this benchmark though the trend is lower for the company itself.

Number of shares not diluted?

The criterion checks whether the number of outstanding shares has decreased. A decrease typically indicates buybacks, which can signal management's confidence in the firm's prospects.

Historical outstanding shares of Under Armour (UAA)

For Under Armour, the outstanding shares have increased from 0 in 2022 to 451,426,000 in 2023, leading to a score of 0 for this criterion. This increase contrasts sharply with the sudden drop to 0 in 2022, an anomaly compared to their historical trend, where shares tended to increase slightly year-over-year. This might suggest a significant restructuring event or an error in reporting for 2022, raising concerns about data reliability. Therefore, the increase in 2023 should be looked at with caution.

Operating of Under Armour (UAA)

Cross Margin is growing?

This criterion examines the difference in Gross Margin between two consecutive years. Gross Margin is crucial because it helps to understand the efficiency at which a company produces its goods or services and its pricing strategy.

Historical gross margin of Under Armour (UAA)

The Gross Margin for Under Armour (UAA) for 2023 is 0.4488, compared to 0.4955 in 2022. This indicates a decrease in Gross Margin. Gross Margin fell by approximately 9.41%, which is concerning as it reveals higher production costs relative to revenue or a poorer pricing strategy. The previous Gross Margins have generally fluctuated but stayed above the industry median, until now. Therefore, this trend is bad and earns 0 points.

Asset Turnover Ratio is growing?

Asset Turnover indicates the efficiency with which a company utilizes its assets to generate sales. A higher ratio is indicative of better performance.

Historical asset turnover ratio of Under Armour (UAA)

Under Armour's Asset Turnover increased from 1.2129 in 2022 to 1.2682 in 2023. This uptick is a positive sign, reflecting an improvement in using its assets more efficiently to generate revenue. Comparison with historical data highlights that, while there has been fluctuation, the recent rise marks a continued recovery from 2020's dip to 0.9063. This positive trend underscores Under Armour’s operational effectiveness and can boost investor confidence, resulting in a score of 1 for this criterion.


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