Under Armour Inc (NYSE: UA, UAA) stock soared nearly 10 percent on Tuesday after the company cleared a very low fourth-quarter earnings bar. However, analysts say Under Armour still has a long way to go to prove the company is back on track.
Excluding one-time items, Under Armour reported quarterly earnings per share of zero cents, in-line with analyst expectations. Quarterly revenue of $1.37 billion came in slightly above analyst estimates of $1.31 billion.
[Read: UA vs. UAA: What’s the Difference Between Under Armour’s 2 Stock Classes?]
The good news for investors is that revenue growth crossed back into positive territory in the fourth quarter, up 5 percent from a year ago. International sales, which now represent 23 percent of total sales, were up 47 percent, providing some hope for long-term investors.
Apparel sales were up 2.5 percent, footwear sales were up 9.5 percent and accessories sales were up 6.1 percent. Direct-to-consumer sales also grew 11 percent on the quarter.
Under Armour has been combating a weak North American athletic apparel environment by restructuring its business and cutting roughly 2 percent of its global workforce.
“Our fourth quarter and full year results demonstrate that the tough decisions we’re making are generating the stability necessary to create a more consistent and predictable path to deliver long-term value to our shareholders,” CEO Kevin Plank says in a statement.
The company says it will incur restructuring charges of between $110 million and $130 million in 2018 due to lease terminations and store closures. Starting in 2019, the company expects to save roughly $75 million per year as a result of its restructuring efforts.
Despite an overall positive quarter, Under Armour still didn’t solve its North America problem, where overall sales dropped another 4 percent. Looking ahead to 2018, Under Armour is anticipating mid-single-digit sales declines to continue in North America, offset by at least 25 percent sales growth in international markets. Overall, the company is guiding for low-single-digit revenue growth.
[See: 7 of the Best Stocks to Buy for 2018.]
Guggenheim Securities analyst Bob Drbul says the big move in Under Armour stock was simply due to mistrust of Under Armour’s previous guidance.
“The market was poised for a disappointment, they delivered what they said they were going to deliver and there was a lot of skepticism on their ability to do that” Drbul said on CNBC. “Inventories are still high, there’s a ton of competition and I still think they have a lot of work.”
Guggenheim has a “neutral” rating for Under Armour stock.
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Under Armour Inc (UA, UAA) Stock Jumps on Improved Revenue originally appeared on usnews.com
