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

lululemon athletica inc. (NASDAQ: LULU) and Under Armour (NYSE:UA) 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 profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Institutional and Insider Ownership

80.6% of lululemon athletica inc. shares are owned by institutional investors. Comparatively, 57.1% of Under Armour shares are owned by institutional investors. 0.3% of lululemon athletica inc. shares are owned by company insiders. Comparatively, 16.5% of Under Armour shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

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

Risk & Volatility

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

Analyst Ratings

This is a summary of current recommendations and price targets for lululemon athletica inc. and Under Armour, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
lululemon athletica inc. 4 15 18 0 2.38
Under Armour 6 10 3 0 1.84

lululemon athletica inc. currently has a consensus price target of $65.03, indicating a potential upside of 11.87%. Under Armour has a consensus price target of $18.67, indicating a potential upside of 19.35%. Given Under Armour’s higher probable upside, analysts plainly believe Under Armour is more favorable than lululemon athletica inc..

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
lululemon athletica inc. $2.37 billion 3.11 $507.41 million N/A N/A
Under Armour $4.98 billion 1.38 $526.36 million $0.48 32.58

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

Summary

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

About lululemon athletica inc.

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.

About Under Armour

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.

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