The sports clothing and accessories company posted adjusted earnings of $0. 01 per share on revenue of $1 billion before the bell. The earnings results were below Wall Street's forecast of $0.03, the shortcoming reflecting the impact of a $59 million stock dividend paid to Class C shareholders during the quarter.
Under Armour also announced a deal with Kohl's (KSS) to sell its apparel there, and it plans to move into the old FAO Schwarz building in New York City. Kohl's is a holding in TheStreet's Dividend Stock Advisor.
These results and plans were apparently not sitting well with some shareholders, however, as the stock plummeted more than 5% during midday trading on higher-than-average volume.
"From our perspective, while we are disappointed in the earnings revisions for the back half of 2016, Under Armour remains on track relative to its existing multi-pronged growth strategies (international, footwear and women's) and brings yet another on stream in the second half of the year (sportswear)," said Growth Seeker portfolio managers Chris Versace and Lenore Elle Hawkins in a note to subscribers Tuesday.
TheStreet's Jim Cramer also noted that the inventory is down from where it was, adding, "I think Under Armour is fine."
Versace and Hawkins are expecting the earnings for the back half of the year to be adjusted lower by $0.03 to $0.05 per share from Wall Street's prediction of $0.53 per share. They also reduced their price target on both UA and UA.C shares to $55 from $60, saying they cannot simply ignore the impact of the reduced bottom-line expectations.
Meanwhile, TheStreet's Trifecta Stocks portfolio is taking its profit and exiting its Randgold Resources (GOLD) position. Portfolio managers Versace and Bob Lang sold 50 shares around $114, booking a return of just under 20%. Versace and Lang said in a note to subscribers Tuesday that they noticed GOLD shares quickly climbing several weeks ago, but the pullback to a price of $112 satisfied their triple-filter approach (Quant Ratings, technical and fundamentals) to close out of the position.
Other noteworthy portfolio news:
- Action Alerts PLUS holding Apple (AAPL) reports after the bell Tuesday. Consensus estimates are calling for earnings of $1.39 per share on revenue of $42.13 billion. Portfolio Manager Jim Cramer and Director of Research Jack Mohr said investors will be focusing narrowly on iPhone unite sales, mix and guidance.
- Fellow AAP holding Twitter (TWTR) is also reporting quarterly results after the market closes. The social media company is expected to post earnings of $0.10 per share on revenue of $606.8 million. Twitter's user growth will be in focus for investors.
- Panera Bread (PNRA) -- another AAP holding -- was downgraded to Sell from Hold at Stifel.