Analyzing lululemon athletica inc. (LULU) and Under Armour (UA)

Under Armour (NYSE: UA) and lululemon athletica inc. (NASDAQ:LULU) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Institutional & Insider Ownership

56.3% of Under Armour shares are held by institutional investors. Comparatively, 80.2% of lululemon athletica inc. shares are held by institutional investors. 16.5% of Under Armour shares are held by insiders. Comparatively, 0.3% of lululemon athletica inc. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Under Armour has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, lululemon athletica inc. has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Under Armour and lululemon athletica inc., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Under Armour 6 9 3 0 1.83
lululemon athletica inc. 4 15 18 0 2.38

Under Armour currently has a consensus price target of $18.79, indicating a potential upside of 11.82%. lululemon athletica inc. has a consensus price target of $65.03, indicating a potential upside of 8.82%. Given Under Armour’s higher possible upside, equities research analysts plainly believe Under Armour is more favorable than lululemon athletica inc..

Valuation and Earnings

This table compares Under Armour and lululemon athletica inc.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Under Armour $4.98 billion 1.49 $526.36 million $0.48 35.00
lululemon athletica inc. $2.37 billion 3.45 $507.41 million N/A N/A

Under Armour has higher revenue and earnings than lululemon athletica inc..

Profitability

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

Net Margins Return on Equity Return on Assets
Under Armour 4.38% 11.06% 5.96%
lululemon athletica inc. 12.21% 23.43% 19.27%

Summary

lululemon athletica inc. beats Under Armour on 7 of the 13 factors compared between the two stocks.

Under Armour Company Profile

Under Armour, Inc. is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. The Company’s segments include North America, consisting of the United States and Canada; Europe, the Middle East and Africa (EMEA); Asia-Pacific; Latin America, and Connected Fitness. Its products are sold across the world and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles. The Company sells its branded apparel, footwear and accessories in North America through its wholesale and direct to consumer channels. As of December 31, 2016, the Company had approximately 151 factory house stores in North America primarily located in outlet centers throughout the United States. In addition, the Company distributes its products in North America through third-party logistics providers with primary locations in Canada, New Jersey and Florida.

lululemon athletica inc. Company Profile

lululemon athletica inc. is a designer, distributor and retailer of athletic apparel. The Company operates through two segments: Company-operated stores and Direct to consumer. It is also engaged in the sale from outlets, showrooms, sales from temporary locations, sales to wholesale accounts, warehouse sales, and license and supply arrangements. Its direct to consumer segment generates revenue from its lululemon and ivivva e-commerce Websites, www.lululemon.com and www.ivivva.com, and other country and region specific Websites. It offers a range of apparel and accessories for women, men and female youth. The Company’s apparel assortment includes items, such as pants, shorts, tops, and jackets designed for healthy lifestyle and athletic activities, such as yoga, running, training, most other sweaty pursuits, and athletic wear for female youth. The Company also offers fitness-related accessories, including an array of items, such as bags, socks, underwear, yoga mats and water bottles.

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