Under Armour's 4Q26 performance disappoints, and FY27 guidance may weigh on market expectations

Overview

This report focuses on Under Armour Inc (UAA.US) 4Q26 results and FY27 outlook. UBS believes that although revenue was slightly better than consensus and SG&A control provided some leverage, gross margin was materially below expectations, FY27 revenue is expected to decline slightly, and EPS guidance is also materially below market expectations. As a result, near-term investor sentiment may worsen and weigh on the share price.

Core views

The core view is: first, FY27 EPS guidance of US$0.08-0.12 is below the market's roughly US$0.23 expectation, which may force sell-side forecasts lower; second, revenue in 4Q26 was not the main issue, as the year-over-year decline was smaller than consensus, but gross-margin pressure was the key reason EPS missed expectations; third, UAA's problems do not imply a broader deterioration in the sportswear industry, and UBS still believes global sportswear consumer demand remains healthy, with the key issue being share divergence among brands.

Analysis framework

The report decomposes the impact of revenue, gross margin, SG&A, interest, and tax rate on EPS by comparing actual results with UBS forecasts, market consensus, and the same period last year; it also combines FY27 company guidance with sell-side consensus to judge the direction of subsequent earnings estimate revisions, and uses multiple analysis plus DCF to support the target price.

Methodology notes

• Earnings variance analysisActuals vs. consensus and UBS forecast

  Compare 4Q26 revenue, gross profit, SG&A, operating profit, and EPS with consensus, UBS estimates, and the same period last year.

  This method is used to identify the source of the earnings miss; the report shows that gross margin below consensus was the main drag on EPS, while SG&A improvement provided some offset.

• Earnings forecast revisionFY27 guidance calibration versus consensus

  Compare the company's FY27 EPS, revenue, gross margin, and operating profit guidance with market expectations.

  UAA's FY27 EPS guidance is clearly below consensus, and UBS therefore expects sell-side analysts to lower FY27 EPS estimates.

• Valuation methodsMultiple analysis and DCF cross-check

  The price target is based on a multiples approach and is supported by DCF valuation.

  The report states that the target price comes from a relative valuation framework and is validated with discounted cash flow, although the full model parameters are not disclosed in the input text.

• Rating frameworkUBS FSR and MRA framework

  Forecast Stock Return is the 12-month expected share-price return plus dividend yield, and MRA is the local one-year market rate plus 5%.

  UBS states that a Buy rating typically requires FSR to exceed MRA by more than 6%, while UAA, due to higher volatility, is subject to the CBE exception, with the Buy threshold set at 15% above MRA.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Under Armour Inc (UAA.US)

  Primary covered name in the report

  Strengths

  A significant decline in SG&A provides cost leverage; inventory is down year over year; revenue in Asia-Pacific and Latin America grew on the report's basis; UBS still assigns a Buy rating and a target price above the current share price.

  Weaknesses

  FY27 EPS guidance is materially below consensus; 4Q26 gross margin was below market expectations; North America revenue declined year over year; the revenue outlook calls for a slight decline, indicating limited visibility into growth.

  Comparison

  4Q26 revenue was slightly better than consensus, but gross margin and EPS were below consensus; FY27 EPS guidance of US$0.08-0.12 is below the market's roughly US$0.23 expectation.

  Risks

  Intense competition, execution risk in entering new categories especially footwear, concentration among key retail partners, low visibility into U.S. and European consumer demand, fashion-cycle volatility, and insufficient new-product innovation.

• Global sportswear industry

  Comparable industry backdrop for UAA's results

  Strengths

  UBS believes the global sportswear consumer environment remains healthy, and overall industry demand has not been invalidated by UAA's results.

  Weaknesses

  Brand-share divergence is pronounced, and weaker brands may still face revenue and profit pressure even in a healthy industry environment.

  Comparison

  The report explicitly states that UAA's negative results should not be interpreted as a bearish signal for the sportswear industry as a whole.

  Risks

  Slowing consumer spending, intensifying competition, channel inventory shifts, and changes in brand momentum could affect the relative performance of different companies within the industry.

Key data

• 4Q26 revenueUS$1.17B, -0.8% y/yRevenue growth was about 35 basis points better than consensus.
• 4Q26 adjusted diluted EPS-US$0.031 cent below consensus and 3 cents below UBS's forecast.
• 4Q26 gross margin43.1%About 350 basis points lower year over year and roughly 105 basis points below the 44.2% consensus.
• 4Q26 SG&AUS$503M, -14.3% y/ySG&A ratio was 42.9%, creating about 675 basis points of leverage year over year.
• 4Q26 operating margin0.2%Expanded by about 325 basis points year over year, but was about 20 basis points below market expectations.
• FY27 adjusted EPS guidanceUS$0.08-0.12Below the market's roughly US$0.23 expectation.
• FY27 operating profit guidanceUS$140M-160MCompared with the market expectation of US$159M, the top end is close but the midpoint is lower.
• Target price and ratingBuy (CBE), US$11.00The disclosure table shows the price was US$6.06 on 2026-05-11.
• Implied upside81.5%Implied excess return is 72.6%, and dividend yield is 0.0%.

Impact & implications

The short-term impact is negative, mainly because FY27 EPS guidance is below consensus and gross margin is below expectations, which may lead to earnings estimate cuts and pressure on the stock. The medium-term implication is more nuanced: UBS does not extrapolate UAA's issues to the overall sportswear industry, but instead believes industry demand remains healthy and that market-share shifts between winners and losers are more important.

Risks

• Under Armour faces intense competition from mature global sportswear and footwear brands, whose product development and marketing budgets are larger.
• The company's expansion into new categories, especially footwear, increases execution risk.
• Sales depend heavily on a small number of key retail partners, and any disruption to those relationships could affect performance.
• Visibility into U.S. and European consumer spending is low, which could affect revenue recovery.
• The sportswear and footwear industries are influenced by fashion cycles, so demand and inventory can fluctuate.
• If the company cannot continue to launch attractive new-product innovations, the investment case for the stock may weaken.
• UBS discloses that it may make a market in the company's securities or ADRs and may hold a long or short position of 0.5% or more of the company's listed shares, so potential conflicts of interest should be noted.

What to watch

• Whether the sell side cuts FY27 EPS expectations from about US$0.23 to the company's US$0.08-0.12 guidance range.
• Whether FY27 revenue declines slightly as guided and whether North America revenue can stabilize.
• Whether gross margin can expand year over year by 220-270 basis points as guided for FY27.
• Whether low-single-digit SG&A growth can offset revenue pressure and support the US$140M-160M operating profit target.
• Whether inventory reductions translate into a healthier discounting environment and gross-margin improvement.
• Execution progress in footwear and other new-category expansion, and whether key retail-channel relationships remain stable.