Under Armour has struggled with ineffective inventory management, which has weighed down gross margins as the company has had to sell inventory at a discount. The company has also been unable to capitalize on the fast-growing athleisure market due to its late entry and weak marketing strategies that are not targeted towards the athleisure consumer. Additionally, the company's restructuring plans are viewed as unlikely to generate sufficient savings, and its bullish Asia-Pacific growth projections are not expected to materialize in the short to medium term.
Nike Stock Pitch: Analysis and ValuationAyan Sengupta
Nike's revenue in fiscal year 2017 was distributed as follows: 57% from footwear, 27% from apparel, 6.5% from equipment, 2% from global brand divisions, and 6.5% from Converse. Geographically, Nike's sales were distributed as: 47% from North America, 19% from Western Europe, 6% from Central & Eastern Europe, 10% from Greater China, 3% from Japan, and 15% from emerging markets. Nike has strengths in its brand reputation and global presence but relies heavily on the footwear market. It faces opportunities in emerging markets but also threats from competition and negative public perceptions.
This is a stock pitch for BlackBerry that was presented to faculty and investment professionals for the Cleveland Research Company Stock Pitch Competition in April 2017. My team's pitch was selected as one of the four finalist groups.
2015 - Cleveland Research Company Stock Pitch Competition Runner UpMichael T. Loffredo
Cytec Industries is positioned to benefit from growth in the aerospace, automotive, and mining industries. It has substantial contracts with Boeing and Airbus to supply lightweight composite materials for commercial aircraft. Legislation requiring automakers to improve fuel efficiency will increase demand for composites. In mining, decreasing ore grades are driving increased production and use of Cytec's separation chemicals. The analyst recommends Cytec as a buy with a 12-month price target of $70.50, representing 30.51% upside.
Miami University 2016 Cleveland Research Company Stock Pitch Competition WinnerMichael T. Loffredo
Orbital ATK is an aerospace and defense company that provides products and services to government and commercial customers. The presentation recommends Orbital ATK as a buy with a 12-month price target of $110, representing 27.1% upside. Key points include Orbital ATK benefiting from international military spending increases, growth in commercial aircraft deliveries, and opportunities in satellite servicing. Risks include competition from larger players and potential issues executing innovative contracts.
Stock pitch of Herc Rentals, traded on the New York Stock Exchange (NYSE). Target price created through a Discounted Cash Flow (DCF) analysis with the EBITDA multiple approach.
Sources: Company Website, Company Filings, Thomson One, RBC Capital Markets, KeyBank Capital Markets, GAMCO Investors, Yahoo! Finance, Independent, PwC, Oxford Economics,
BrickDiscovery provides end-to-end eDiscovery services to large corporations. Valuation analyses value the company between $433-$476 million. The analyses include precedent transactions, comparable companies, discounted cash flow, and leveraged buyout models. It is recommended that BrickDiscovery pursue a near-term sale to a financial sponsor to scale internationally, such as in Asia.
Nike Stock Pitch: Analysis and ValuationAyan Sengupta
Nike's revenue in fiscal year 2017 was distributed as follows: 57% from footwear, 27% from apparel, 6.5% from equipment, 2% from global brand divisions, and 6.5% from Converse. Geographically, Nike's sales were distributed as: 47% from North America, 19% from Western Europe, 6% from Central & Eastern Europe, 10% from Greater China, 3% from Japan, and 15% from emerging markets. Nike has strengths in its brand reputation and global presence but relies heavily on the footwear market. It faces opportunities in emerging markets but also threats from competition and negative public perceptions.
This is a stock pitch for BlackBerry that was presented to faculty and investment professionals for the Cleveland Research Company Stock Pitch Competition in April 2017. My team's pitch was selected as one of the four finalist groups.
2015 - Cleveland Research Company Stock Pitch Competition Runner UpMichael T. Loffredo
Cytec Industries is positioned to benefit from growth in the aerospace, automotive, and mining industries. It has substantial contracts with Boeing and Airbus to supply lightweight composite materials for commercial aircraft. Legislation requiring automakers to improve fuel efficiency will increase demand for composites. In mining, decreasing ore grades are driving increased production and use of Cytec's separation chemicals. The analyst recommends Cytec as a buy with a 12-month price target of $70.50, representing 30.51% upside.
Miami University 2016 Cleveland Research Company Stock Pitch Competition WinnerMichael T. Loffredo
Orbital ATK is an aerospace and defense company that provides products and services to government and commercial customers. The presentation recommends Orbital ATK as a buy with a 12-month price target of $110, representing 27.1% upside. Key points include Orbital ATK benefiting from international military spending increases, growth in commercial aircraft deliveries, and opportunities in satellite servicing. Risks include competition from larger players and potential issues executing innovative contracts.
Stock pitch of Herc Rentals, traded on the New York Stock Exchange (NYSE). Target price created through a Discounted Cash Flow (DCF) analysis with the EBITDA multiple approach.
Sources: Company Website, Company Filings, Thomson One, RBC Capital Markets, KeyBank Capital Markets, GAMCO Investors, Yahoo! Finance, Independent, PwC, Oxford Economics,
BrickDiscovery provides end-to-end eDiscovery services to large corporations. Valuation analyses value the company between $433-$476 million. The analyses include precedent transactions, comparable companies, discounted cash flow, and leveraged buyout models. It is recommended that BrickDiscovery pursue a near-term sale to a financial sponsor to scale internationally, such as in Asia.
The report analyzes options for Larson Inc.'s joint venture operations in Nigeria due to challenges reported by the CEO. The options evaluated are reducing equity stake to 49% by selling 26% to the Nigerian government, transferring employees, or liquidating assets to start a business in Ethiopia. The recommendation is to reduce equity stake by selling to the government, using funds to establish training programs to develop local employees, and shifting the CEO to an advisory role while appointing a new local leader. This addresses the key issues of government regulations, human resources, and leadership concerns.
Asia Investment & Banking Conference 2018 – HSBC M&A Competition Champions (A...Amir Hisham
AIBC 2018 HSBC M&A Competition
Our team in the Investment Banking Division has been selected to present a pitch book - to be termed as a ‘Strategic Review’ - to the Board of Directors of our client, Michael Kors Holdings Limited (KORS), regarding a potential acquisition target in the fashion industry in line with their growth strategy.
Credit Suisse Fall 2015 Pitch Competitionjontripp17
The document discusses Credit Suisse seeking an anchor investment for its private equity fund. It recommends purchasing ABM Industries as a platform company to build upon through acquisitions. The recommendation analyzes ABM's industry exposure, growth strategy, margin expansion opportunities, management team, and potential exit opportunities for investors.
15th Annual William Blair Investment Banking Case CompetitionOscar Arenas
Talawanda Turbines is seeking strategic options including an IPO, sale to a strategic acquirer, or sale to a financial sponsor. The valuation analysis values Talawanda between $590-670 million based on precedent transactions, comparable companies, and a DCF model. Key growth drivers include increasing exposure to resilient end markets like food & beverage and healthcare. The company has strong margins and market share in the fragmented industrial fans/blowers industry. William Blair recommends a near-term sale to a strategic buyer or financial sponsor that can leverage synergies and expand Talawanda's market presence.
This is the presentation from the capstone simulation competition conducted at Kelley School of Business towards the completion of our MBA. The simulation involved decision on various business functions including Marketing, Operations, Finance and Investor relations. We worked in a team of 5-6 students to run a company making decisions on these functions as a team.
The document discusses a strategic review proposal for Egon Zehnder International. It provides background on the company, including that it operates as one firm with a partner-based structure and fixed fee model. It then outlines areas the strategic review would provide clarity on, such as strengths/weaknesses and future direction. Various strategic options are presented, including market penetration, product development, market development and diversification. A competitive analysis notes alternatives like internet-based searches and job placement sites. The review would examine political, economic, social and technological factors. A strategy diamond outlines arenas, vehicles, staging, differentiators and economic logic. Recommendations include using the internet to complement services, altering the partner to non-partner ratio
McKinsey & Company: Managing Knowledge and LearningDisha Ghoshal
As part of Strategy execution, this presentation on was on how McKinsey & Company flourished throughout the years by Managing Knowledge and Learning diligently.
This case was presented in Fall 2009 and revolves around the decentralization of BP America after BP merged with Standard Oil in 1987. In this presentation, the changing role of staff departments is examined in this newly decentralized organization.
This document discusses Nintendo's history and strategies for reviving its business and transforming the video game market. It outlines Nintendo's founding in 1889 as a playing card company and its entry into the video game console market in the 1980s. While Nintendo was initially successful, it struggled in the mid-1990s as competitors like Sony and Microsoft entered the market. However, Nintendo made a comeback in the late 2000s with the launch of the Wii console and its innovative motion-controlled gameplay. The document performs a SWOT analysis of Nintendo and discusses its marketing strategies, including affordable pricing, family-friendly games, and expanding its customer base beyond hardcore gamers. It also considers questions around the sustainability of the Wii's success and potential
William Blair Investment Banking Competition Slide DeckEric Bonelli
This document provides an executive summary for Paesano's Products, which manufactures household, personal care, and hospitality products. It evaluates Paesano's using valuation methods like comparable companies, precedent transactions, and DCF. Key points:
- Paesano's is well-positioned for growth in personal and household products due to pandemic demand.
- Valuation analysis values the company between $600-800 million.
- The summary recommends a sale to a middle market financial sponsor to optimize growth potential.
2020 - 13th Annual William Blair Investment Banking Case Competition Presenta...Demetre Carnot
Paesano's Products is a leading contract manufacturer and formulator for personal care and household products. The document discusses Paesano's industry, financials, growth opportunities, and strategic options moving forward. It recommends a full sale of Paesano's to a financial sponsor or strategic acquirer, valued between $700-760 million, to take advantage of high acquisition interest while retaining strong management.
Morgan Stanley is a top global financial services firm founded in 1935. It has over 60,000 employees operating in 42 countries. While Rob Parson helped boost Morgan Stanley's market share through his skills and client relationships, his aggressive personality and lack of teamwork skills did not align with Morgan Stanley's culture of collaboration and respect. In 1993, Morgan Stanley implemented a 360-degree performance evaluation system to provide employees feedback. Rob Parson's evaluation showed strengths in business generation but weaknesses in management and teamwork. Ultimately, despite his contributions, Parson was not promoted due to not embodying Morgan Stanley's values.
The presentation analyses the strategy used by Nintendo which is one of the worlds leading brand in the video game industry. The case also discusses in detail strategy used by its competitor ATARI and it also analyses the different strategy used by Nintendo in both Japan and US.
The document provides an agenda and summaries from a meeting of DIGBYCO. It discusses the sensor industry overview, DIGBY's strategy and goals, a competitive analysis of their competitors, areas where DIGBY could improve, and what they did right. Key points include maintaining a presence in every market, distinguishing products with design and awareness, increasing market share against top competitors Erie and Chester, utilizing high capacity and financial leverage, and recommendations to improve research and development, marketing, production, and finance.
2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Fin...Oscar Arenas
This document provides an overview and analysis of Fastenal, an industrial goods distributor. It includes an investment thesis that Fastenal is undervalued given initiatives that could drive operating margin expansion despite analyst pessimism over macro factors. The document outlines Fastenal's business model, strategy of focusing on onsite locations and national accounts, and financial projections showing revenue growth driven by these initiatives. Key risks discussed are a potential manufacturing downturn and loss of suppliers.
Silvio Napoli at Schindler India-HBS Case StudyRawad Mroueh
Silvio Napoli was appointed as the head of Schindler's new subsidiary in India in 1997. He recruited an Indian team and developed an initial plan to standardize elevator products, outsource manufacturing, and achieve breakeven within 4 years. However, challenges emerged such as lack of support from European plants and large increases in import duties. While Napoli's initial strategies focused on costs, his impatience and lack of flexibility made adapting to the new challenges difficult.
Xiamen Airlines reformed its pilot compensation system in 2009 to better link pay to performance. Initial results were positive with improved productivity and satisfaction, but recruiting and retaining pilots remained challenging due to shortages and competition. The new system provided incentives like increased pay for extra hours flown and bonuses for achievements. Outcomes included pilots flying more hours, saving on hiring, experienced pilots training newcomers, and lower attrition. Profits increased nearly 500% from 2009-2010 under the new system. However, questions remained about sustainability if the industry became less profitable and what else the airline could offer to retain talent.
Strategic Management: Walt Disney Case StudyCallie Unruh
The document is an organizational case study of The Walt Disney Company. It provides an overview of Disney's mission, internal assessment including finances and organizational structure, external assessment of competitors and market position, SWOT analysis, and strategies. The key points are:
- Disney's mission is to be a leading producer and provider of entertainment and information globally.
- Internally it has a diversified structure with business units in media networks, studio entertainment, parks and resorts, and consumer products.
- Externally it competes with other large media companies and assesses opportunities in technology changes, new markets, and threats like economic shifts.
- Strategies discussed include pursuing growth through diversification, increasing market
Capstone is a rich, complex business simulation designed to teach strategy, competitive analysis, finance, cross-functional alignment, and the selection of tactics to build a successful and focused company. As part of our tragic and disastrous campaign as Digby, we have put our learnings in the form of a presentation to save ourselves from getting a C grade !!
Under Armour has experienced significant growth over the past decade. However, the analyst assigns a fair value of $52 per share to Under Armour stock based on a discounted cash flow analysis and relative valuation, believing the current $75-80 price is overvalued. While international expansion and growth in high-margin fitness products could drive future success, there is risk if growth slows or margins decline. The analyst recommends selling current shares due to high expectations built into the price.
OPXS is a monopoly provider of laser-protected periscopes to the US military. It has no competitors after acquiring its previous major rival. OPXS revenues and profits have steadily increased in recent years due to increased military spending on vehicles like tanks that use its products. The company trades on the OTC market, which may suppress its valuation. However, its current valuation of EV/revenue of 0.76x and EV/EBITDA of 8.8x presents an attractive risk/reward given its dominant market position and growth prospects from military spending increases and commercial expansion plans.
The report analyzes options for Larson Inc.'s joint venture operations in Nigeria due to challenges reported by the CEO. The options evaluated are reducing equity stake to 49% by selling 26% to the Nigerian government, transferring employees, or liquidating assets to start a business in Ethiopia. The recommendation is to reduce equity stake by selling to the government, using funds to establish training programs to develop local employees, and shifting the CEO to an advisory role while appointing a new local leader. This addresses the key issues of government regulations, human resources, and leadership concerns.
Asia Investment & Banking Conference 2018 – HSBC M&A Competition Champions (A...Amir Hisham
AIBC 2018 HSBC M&A Competition
Our team in the Investment Banking Division has been selected to present a pitch book - to be termed as a ‘Strategic Review’ - to the Board of Directors of our client, Michael Kors Holdings Limited (KORS), regarding a potential acquisition target in the fashion industry in line with their growth strategy.
Credit Suisse Fall 2015 Pitch Competitionjontripp17
The document discusses Credit Suisse seeking an anchor investment for its private equity fund. It recommends purchasing ABM Industries as a platform company to build upon through acquisitions. The recommendation analyzes ABM's industry exposure, growth strategy, margin expansion opportunities, management team, and potential exit opportunities for investors.
15th Annual William Blair Investment Banking Case CompetitionOscar Arenas
Talawanda Turbines is seeking strategic options including an IPO, sale to a strategic acquirer, or sale to a financial sponsor. The valuation analysis values Talawanda between $590-670 million based on precedent transactions, comparable companies, and a DCF model. Key growth drivers include increasing exposure to resilient end markets like food & beverage and healthcare. The company has strong margins and market share in the fragmented industrial fans/blowers industry. William Blair recommends a near-term sale to a strategic buyer or financial sponsor that can leverage synergies and expand Talawanda's market presence.
This is the presentation from the capstone simulation competition conducted at Kelley School of Business towards the completion of our MBA. The simulation involved decision on various business functions including Marketing, Operations, Finance and Investor relations. We worked in a team of 5-6 students to run a company making decisions on these functions as a team.
The document discusses a strategic review proposal for Egon Zehnder International. It provides background on the company, including that it operates as one firm with a partner-based structure and fixed fee model. It then outlines areas the strategic review would provide clarity on, such as strengths/weaknesses and future direction. Various strategic options are presented, including market penetration, product development, market development and diversification. A competitive analysis notes alternatives like internet-based searches and job placement sites. The review would examine political, economic, social and technological factors. A strategy diamond outlines arenas, vehicles, staging, differentiators and economic logic. Recommendations include using the internet to complement services, altering the partner to non-partner ratio
McKinsey & Company: Managing Knowledge and LearningDisha Ghoshal
As part of Strategy execution, this presentation on was on how McKinsey & Company flourished throughout the years by Managing Knowledge and Learning diligently.
This case was presented in Fall 2009 and revolves around the decentralization of BP America after BP merged with Standard Oil in 1987. In this presentation, the changing role of staff departments is examined in this newly decentralized organization.
This document discusses Nintendo's history and strategies for reviving its business and transforming the video game market. It outlines Nintendo's founding in 1889 as a playing card company and its entry into the video game console market in the 1980s. While Nintendo was initially successful, it struggled in the mid-1990s as competitors like Sony and Microsoft entered the market. However, Nintendo made a comeback in the late 2000s with the launch of the Wii console and its innovative motion-controlled gameplay. The document performs a SWOT analysis of Nintendo and discusses its marketing strategies, including affordable pricing, family-friendly games, and expanding its customer base beyond hardcore gamers. It also considers questions around the sustainability of the Wii's success and potential
William Blair Investment Banking Competition Slide DeckEric Bonelli
This document provides an executive summary for Paesano's Products, which manufactures household, personal care, and hospitality products. It evaluates Paesano's using valuation methods like comparable companies, precedent transactions, and DCF. Key points:
- Paesano's is well-positioned for growth in personal and household products due to pandemic demand.
- Valuation analysis values the company between $600-800 million.
- The summary recommends a sale to a middle market financial sponsor to optimize growth potential.
2020 - 13th Annual William Blair Investment Banking Case Competition Presenta...Demetre Carnot
Paesano's Products is a leading contract manufacturer and formulator for personal care and household products. The document discusses Paesano's industry, financials, growth opportunities, and strategic options moving forward. It recommends a full sale of Paesano's to a financial sponsor or strategic acquirer, valued between $700-760 million, to take advantage of high acquisition interest while retaining strong management.
Morgan Stanley is a top global financial services firm founded in 1935. It has over 60,000 employees operating in 42 countries. While Rob Parson helped boost Morgan Stanley's market share through his skills and client relationships, his aggressive personality and lack of teamwork skills did not align with Morgan Stanley's culture of collaboration and respect. In 1993, Morgan Stanley implemented a 360-degree performance evaluation system to provide employees feedback. Rob Parson's evaluation showed strengths in business generation but weaknesses in management and teamwork. Ultimately, despite his contributions, Parson was not promoted due to not embodying Morgan Stanley's values.
The presentation analyses the strategy used by Nintendo which is one of the worlds leading brand in the video game industry. The case also discusses in detail strategy used by its competitor ATARI and it also analyses the different strategy used by Nintendo in both Japan and US.
The document provides an agenda and summaries from a meeting of DIGBYCO. It discusses the sensor industry overview, DIGBY's strategy and goals, a competitive analysis of their competitors, areas where DIGBY could improve, and what they did right. Key points include maintaining a presence in every market, distinguishing products with design and awareness, increasing market share against top competitors Erie and Chester, utilizing high capacity and financial leverage, and recommendations to improve research and development, marketing, production, and finance.
2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Fin...Oscar Arenas
This document provides an overview and analysis of Fastenal, an industrial goods distributor. It includes an investment thesis that Fastenal is undervalued given initiatives that could drive operating margin expansion despite analyst pessimism over macro factors. The document outlines Fastenal's business model, strategy of focusing on onsite locations and national accounts, and financial projections showing revenue growth driven by these initiatives. Key risks discussed are a potential manufacturing downturn and loss of suppliers.
Silvio Napoli at Schindler India-HBS Case StudyRawad Mroueh
Silvio Napoli was appointed as the head of Schindler's new subsidiary in India in 1997. He recruited an Indian team and developed an initial plan to standardize elevator products, outsource manufacturing, and achieve breakeven within 4 years. However, challenges emerged such as lack of support from European plants and large increases in import duties. While Napoli's initial strategies focused on costs, his impatience and lack of flexibility made adapting to the new challenges difficult.
Xiamen Airlines reformed its pilot compensation system in 2009 to better link pay to performance. Initial results were positive with improved productivity and satisfaction, but recruiting and retaining pilots remained challenging due to shortages and competition. The new system provided incentives like increased pay for extra hours flown and bonuses for achievements. Outcomes included pilots flying more hours, saving on hiring, experienced pilots training newcomers, and lower attrition. Profits increased nearly 500% from 2009-2010 under the new system. However, questions remained about sustainability if the industry became less profitable and what else the airline could offer to retain talent.
Strategic Management: Walt Disney Case StudyCallie Unruh
The document is an organizational case study of The Walt Disney Company. It provides an overview of Disney's mission, internal assessment including finances and organizational structure, external assessment of competitors and market position, SWOT analysis, and strategies. The key points are:
- Disney's mission is to be a leading producer and provider of entertainment and information globally.
- Internally it has a diversified structure with business units in media networks, studio entertainment, parks and resorts, and consumer products.
- Externally it competes with other large media companies and assesses opportunities in technology changes, new markets, and threats like economic shifts.
- Strategies discussed include pursuing growth through diversification, increasing market
Capstone is a rich, complex business simulation designed to teach strategy, competitive analysis, finance, cross-functional alignment, and the selection of tactics to build a successful and focused company. As part of our tragic and disastrous campaign as Digby, we have put our learnings in the form of a presentation to save ourselves from getting a C grade !!
Under Armour has experienced significant growth over the past decade. However, the analyst assigns a fair value of $52 per share to Under Armour stock based on a discounted cash flow analysis and relative valuation, believing the current $75-80 price is overvalued. While international expansion and growth in high-margin fitness products could drive future success, there is risk if growth slows or margins decline. The analyst recommends selling current shares due to high expectations built into the price.
OPXS is a monopoly provider of laser-protected periscopes to the US military. It has no competitors after acquiring its previous major rival. OPXS revenues and profits have steadily increased in recent years due to increased military spending on vehicles like tanks that use its products. The company trades on the OTC market, which may suppress its valuation. However, its current valuation of EV/revenue of 0.76x and EV/EBITDA of 8.8x presents an attractive risk/reward given its dominant market position and growth prospects from military spending increases and commercial expansion plans.
The document summarizes a sell-side equity research report on WD-40 Company. The report recommends selling WD-40 stock based on its expensive valuation relative to the company's slow growth prospects. Key points include limited revenue growth of 3% annually, intrinsic valuations below the current stock price based on discounted cash flow and dividend discount models, and margin expansion from lower oil prices that is not sustainable long-term. The report also notes that generous stock repurchases have inflated the stock price in recent years.
This document provides an analysis of WD-40 Company (WDFC) by students participating in the CFA Institute Research Challenge. They initiate coverage of WDFC with a SELL recommendation and 12-month price target of $91, representing a 16% downside. Key points of their analysis include: limited top-line growth of 3% annually, intrinsic values below current market values based on DCF and dividend discount models, margin expansion from lower oil prices is unsustainable, and the stock price has been inflated by share repurchases funded with increased debt.
This document provides an analysis of Artisan Partners Asset Management (APAM). It discusses APAM's products, performance, ownership structure, and competitive positioning in the asset management industry. Some key points:
- APAM has approximately $97 billion in assets under management across 15 investment strategies. However, 75% of its AUM is in funds closed to new investors, limiting its growth potential.
- APAM's fund performance has been declining relative to peers, which could lead to lower inflows and pressure to reduce fees.
- The industry is seeing a shift toward lower-fee passive investments, which may compress fees for active managers like APAM.
- APAM derives most of its revenue from
The document proposes that Under Armour acquire Columbia Sportswear to quickly expand its product offerings and strategically position itself in growing international markets. It analyzes the athletic apparel industry, identifying opportunities for growth. The document concludes that acquiring Columbia would allow Under Armour to penetrate new markets, diversify its geographic footprint, and leverage Columbia's distribution channels for international expansion.
The document proposes that Under Armour acquire Columbia Sportswear to quickly expand its product offerings and strategically position itself in growing international markets. It analyzes the athletic apparel industry, identifying opportunities for growth. The document recommends that Under Armour acquire Columbia to preserve its brand equity while allowing for expansion into new product segments and geographic markets. It asserts that the acquisition would meet Under Armour's goals of organic growth and international expansion.
The document provides a quarterly report from Conquest Strategies, LLC on their MidCap portfolio for Q4 2015. It summarizes the strategy, investment objective, and performance for the quarter and year. While the portfolio underperformed the benchmarks for the quarter, it outperformed for the year. The report discusses sector allocations and top holdings, noting increases to utilities and healthcare. It provides analysis of selected positions and the outlook.
My group created an Integrated marketing strategy plan for Nike athletic shoes, based on the data collected from Nike 10K report, Statista, IBISWorld, and etc. in 2018. This slides include but not limited to industry analysis, market analysis, competition analysis, business analysis, recommendations for 2019.
The document summarizes the performance of a trading strategy during the 2019 Bloomberg Trading Challenge. The strategy achieved a total return of 10.6% compared to the benchmark return of 8.4%, resulting in an outperformance of 2.2%. The strategy utilized a mix of fundamental analysis, technical indicators, and momentum signals to identify opportunities while also holding a cash position to hedge against volatility. The largest risk factor was exposure to the technology sector, and limited nominal losses from few positions helped preserve overall gains for the strategy.
I worked in a team and we were asked to evaluate Gap, Inc. and give specific recommendations for future growth and prosperity. This is the report we created based on our research and findings.
The athletic apparel industry is worth approximately $168 billion worldwide in 2017 and is estimated to reach $231.7 billion by 2024. Major players like Nike and Adidas dominate the market but new entrants are expected to join. The industry is facing trends like activewear lines from fashion retailers only accounting for 10% of the market. The North American sports apparel market is expected to grow at a compound annual growth rate of 5.9% from 2016-2022.
Capsim "stockholders' meeting" presentation, CSULBA FEMBA 11, August 2011Will Woods
Erie Sensors held its quarterly stockholders' meeting to report on company performance and strategy. The company achieved high scores on its balanced scorecard, exceeding cumulative goals. Erie has the highest market share in multiple sensor segments and places in the top 15 of companies internationally based on management performance. The meeting outlined the company's product differentiation strategy and goals for each executive to maximize growth, customer acquisition, processes, and learning/innovation. Stockholders were encouraged to continue investing in Erie due to its financial effectiveness, stability, and continued growth prospects in the sensor industry.
This document analyzes the security of an investment in Under Armour. It provides financial highlights and ratios for 2013-2016 and projections through 2020. Key points include high debt/equity ratios that pose financial risk, increasing assets but decreasing asset turnover, and recommendations to hold the stock with a price target of $30.63 based on discounted cash flow valuation. Risks discussed are related to finances, markets, and operations.
Seminar 8 creating an investment recommendationpvalantagul
The document provides guidance on creating an investment recommendation and pitching a stock. It outlines the key components of a stock pitch, including analyzing if a company is a good business and if it will be a good stock. An example stock pitch for Waste Management is then presented, analyzing the company, industry, financials, valuation, opportunities/risks, and recommending the stock as a buy. The document emphasizes synthesizing information from prior seminars to develop an investment thesis and recommendation.
Stock Pitch For Watch Manufacturing Companies PowerPoint Presentation Ppt Sli...SlideTeam
Our Stock Pitch For Watch Manufacturing Companies PowerPoint Presentation Ppt Slide Template is the perfect way to pitch your stock. We have researched thousands of stock pitches and designed the most impactful way to convince your investors to invest in your equity. http://bit.ly/2w64AGL
The document discusses General Electric's (GE) matrix for strategic portfolio analysis and classification of business units. The GE matrix analyzes each business unit based on its market attractiveness and the company's business strength in that unit. It divides the portfolio into 9 cells based on these factors. The upper left zone contains the most important businesses, the lower right the least important, and the center diagonal zone houses medium importance businesses. The matrix provides a framework for objectively setting strategies for each business unit based on its classification.
DSP World Agriculture Fund -
An open ended Fund of Funds Scheme investing in Agricultural companies through International funds
This Open-ended Fund of Funds Scheme is suitable for investors who are seeking* :
1. Long-term capital growth
2. Investment in units of overseas funds which invest primarily in equity and equity related securities of companies in the agriculture value chain
3. High Risk**
*Investors should consult their financial advisors if in doubt about whether the Scheme is suitable for them.
**Risk may be represented as:
Low: Investors understand that their principal will be at low risk
Moderately Low: Investors understand that their principal will be at moderately low risk
Moderate: Investors understand that their principal will be at moderate risk
Moderately High: Investors understand that their principal will be at moderately high risk
High: Investors understand that their principal will be at high risk
Under Armour Case, Team 2 Final Presentationbcrowle2
I competed in a 2 day Deloitte Information Technology Consulting Case Competition, open to all IT students at Notre Dame. Working with a team of 3, we put together this deck of slides in less than 48 hours.
Similar to GIC x Nanyang Capital Stock Pitch Challenge 2018 - Alpha Capital (20)
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
GIC x Nanyang Capital Stock Pitch Challenge 2018 - Alpha Capital
1. LPHA CAPITAL
GIC x NYC Stock Pitch Challenge 2018
Team members:
Alwyn Thu Naung Zaw
Andrew Chok Rong Yao
Andy Chang Guang Hao
Marvin Chang Guang Wei
1
SELL
12-month price target:
USD11.73 (38.1% return)Under Armour, Under Pressure
Disclaimer:
This presentation deck has been prepared by Alpha Capital for the GIC x NYC Stock Pitch Challenge 2018, using publicly available information.
Alpha Capital has relied on and in many cases assumed without independent verification the accuracy and completeness of all such information.
This presentation deck is strictly for academic purposes and do not replace independent professional judgement.
2. LPHA CAPITAL
Executive Summary
Investment
proposal
✓ USD20mn short position in Under Armour (UAA-US) over a 1-year horizon
▪ Entry price of USD18.96 per share and target exit price of USD11.73 per share
Company and
industry overview
✓ Under Armour, Inc. (“Under Armour”) is one of the largest footwear, sports and casual apparel company in US
✓ Athleisure market is an exciting segment, providing high growth and higher margins than traditional performance apparel
Investment thesis
✓ Ineffective inventory management to continue weighing down on margins
▪ Discounted sales to get rid of inventory buildup likely to result in continued depressed gross profit margins
✓ Inability to capitalize on fast-growing, high-margin athleisure market
▪ Under Armour’s late entry into the athleisure market and poor marketing strategy continue to hinder its ability to gain a foothold in the
high-margin high-growth segment
✓ Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
▪ Management provided an overly optimistic guidance on achieving a high DTC mix to justify gross margin recovery
✓ Restructuring plans likely to be ineffective in generating savings for the firm
▪ Restructuring initiatives by Under Armour have not been designed well enough to achieve SG&A savings and EBIT margin recovery
✓ Bullish APAC growth projected by consensus failing to materialize in the short to medium term
▪ Consensus is not correctly pricing in the cost of expansion into a market that Under Armour has weak presence in and is
overestimating its share in the region’s growth prospects
✓ Poor corporate governance yet to be fully priced in
▪ Under Armour’s weak governance, as seen in lacking board oversight and entrenched CEO powers, are likely precursors to future
financial/accounting and strategic issues
Valuation
✓ UAA-US is currently trading at 78% of 52-week high
✓ Target price of USD11.73 per share is a blended average of DCF (70% weight attributed to implied price of USD10.15 per share) and
FY2019 EV/EBITDA multiple (30% weight attributed to implied price of USD15.43 per share)
✓ DCF conducted using WACC of 6.67% and terminal growth rate of 2.5%
Key risks
✓ Upside risks include execution risks related to short-selling, improved inventory management and restructuring efforts resulting in margins
expansion and successful penetration into athleisure market
Source: Alpha Capital 2
3. LPHA CAPITAL
Founded in 1996, and headquartered in Baltimore, US, Under Armour is currently the third largest sportswear brand in the world.
Business description Key historical financials
Geographical presence
Business Overview
2.3
3.1
4.0
4.8 5.0
48.7% 49.0%
48.1% 46.4% 45.1%
13.5% 13.8% 12.9% 11.7%
6.6%
0.0%
40.0%
1.0
3.0
5.0
2013A 2014A 2015A 2016A 2017A
Margins(%)
Revenue(USDbn)
Revenue Gross margin EBITDA margin
Asia Pacific
EMEA
Latin America
North America
78%
9%
9%
4%
North America EMEA
Asia Pacific Latin America
2017A revenue
✓ Under Armour develops, markets, and sells performance apparel, footwear
and accessories for men, women and youth
✓ Its Connected Fitness segment offers digital fitness services through
MapMyFitness, MyFitnessPal and Endomondo applications
✓ Majority of sales are generated via wholesale channels, which include
sporting goods chains and retailers; it also sells products via its own
network of brand and factory house stores
✓ In 2017, sales via wholesale, direct to consumer, licensing and Connected
Fitness channels represented 61%, 35%, 2% and 2% of revenue
respectively
Product offerings
72% 68% 68%
17% 21% 21%
9% 9% 9%
1% 2% 2%
2015A 2016A 2017A
Connected Fitness
Accessories
Footwear
Apparel
Apparel
Footwear
Accessories
Connected
Fitness
Source: Capital IQ 3
4. LPHA CAPITAL
Under Armour has underperformed the broader index and has since fallen from a 3-year high of USD51.86 per share in Sep 2015 to trade at a 3-month VWAP of
USD21.33.
Historical Share Price Performance
0
20
40
60
-
20.00
40.00
60.00
80.00
Sep 2015 Mar 2016 Sep 2016 Mar 2017 Sep 2017 Mar 2018 Sep 2018
Volumetraded(mn)
Shareprice(USD)
Volume traded Under Armour NYSE Composite Index (rebased)
As at 14 Sep 2018
Share price USD18.96
Shares outstanding 444.9mn
Market capitalization USD8.16bn
Enterprise value USD8.74bn
3-month VWAP USD21.33
6-month VWAP USD19.89
1-year VWAP USD17.10
3-year VWAP USD28.19
52-week high USD24.31
52-week low USD11.61
S/N Date Event Price (USD) EV/EBITDA P/E
28 Jan 2016
Under Armour reported better than expected quarterly results driven by strong revenue growth in the
footwear segment and extensive overseas expansion.
42.04 36.67x 80.07x
25 Oct 2016
Under Armour warned investors that astronomical growth from prior years will not continue due to a
slowdown in core North American market and its male sporting apparel segment reaching maturity.
32.89 24.99x 74.02x
31 Oct 2017
Under Armour reported worse than expected quarterly sales amidst lower domestic demand for its
footwear and apparel segments.
12.52 12.54x 23.84x
26 Jul 2018
Under Armour reported quarterly revenue that exceeded expectations due to gradually improving
athletic space in US and strong sales in Europe and Asia.
22.04 31.86x n.m.
3
2
4
1
3
2
4
1
Source: Capital IQ, Bloomberg 4
5. LPHA CAPITAL
15%
12%
1%
4%
Others
68%
1.4%
1.6%
1.9%
2.2%
10.3%
15.7%
The global sportswear industry is dominated by Nike and Adidas; within the highest-growing Asia Pacific region, Under Armour only has a 1% share, with Anta and Li-Ning
being the domestic brands that compete against global players.
Under Armour’s main competitors Asia Pacific is the highest growth region
Geographical diversification amongst global brands
Industry Overview
Market share by brands in 2017
2017 global brand share breakdown LTM revenue
USD36,397mn
USD4,470mn
USD3,459mn
USD5,102mn
USD5,126mn
USD25,311mn
(100.0)
-
100.0
200.0
300.0
400.0
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Sportswear spending per capita (USD)
5-year
forward CAGR
Size of bubble represents
2017 market size (USDbn)
North America
USD113.8bn
Asia Pacific
USD74.6bnCEEMA
USD33.6bn
Western Europe
USD57.4bn
Latin America
USD20.8n
North America Asia Pacific
20%
5%
4%
3%
Others
68%
54% 49% 42% 47% 47% 48%
48% 47%
43%
54% 53% 53% 50% 49% 49%
43% 45%
48%
94% 94% 94% 94% 94% 91% 87% 83%
76%
2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
Nike (North America)
Adidas (North America & Western Europe)
Under Armour (North America)
% of sales derived from home market
Source: Euromonitor, BMI Research, Frost & Sullivan 5
6. LPHA CAPITAL
The sportswear industry is gradually moving from performance apparel to athleisure products.
Under Armour’s growth story is in its final chapters More players joining the high-margin athleisure industry
Industry Overview (cont’d)
12%
8% 10% 10%
6%
12%
3%
-1%
2% -3%
14%
25% 27%
32%
28%
22%
3%
2012A 2013A 2014A 2015A 2016A 2017A
Nike Adidas Under Armour
Yoy revenue growth (USD)
Under Armour’s growth slowing while Nike and Adidas hold steady Athleisure market
Pure play
Sportswear
Others
Pure-play enjoys higher margins
30%
40%
50%
60%
70%
80%
Luxury
Pure-play
Traditional
Mass
Porter’s 5 forces analysis
Bargaining
power of
suppliers
Bargaining
power of
buyers
Threat of
substitutes
Threat of
new
entrants
Industry
rivalry
Bargaining power
of suppliers
Bargaining power
of buyers
Threat of
substitutes
Threat of new
entrants
Industry rivalry
✓ High for Under Armour, low for larger players as suppliers are heavily dependent on them
✓ Under Armour’s supply chain is concentrated, with 50% of fabric coming from 6 suppliers
✓ Moderate for Under Armour as it derives large portion of revenue from wholesale
✓ Under Armour decides product and price sold, depending on inventory conditions
✓ Moderate for Under Armour as it focuses on performance sportswear through
partnerships with top athletes; however, there is potential for disruption by athleisure
✓ Low industry-wide, as new entrants need to compete with the scale and sponsorship
dollars invested by incumbents
✓ High industry-wide, as there is constant need to develop new products and invest in
marketing; e-commerce has also allowed for easier comparison between brands
Source: Euromonitor, BMI Research, Frost & Sullivan 6
7. LPHA CAPITAL
Overview of Investment Thesis
1 Ineffective inventory management to continue weighing down on margins
2
3
4
5
6
Inability to capitalize on fast-growing, high-margin athleisure market
Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
Restructuring plans likely to be ineffective in generating savings for the firm
Bullish APAC growth projected by consensus failing to materialize
in the short to medium term
Poor corporate governance yet to be fully priced in
12-mth target price:
USD11.73 per share
Source: Alpha Capital 7
8. LPHA CAPITAL
Under Armour’s mismanagement of inventory has resulted in discounted sales, which have harmed gross margins. In 2017, gross margin decreased 140bps.
Accumulation of inventory despite stalling sales Inventory turnover inefficient compared to global leaders
Investment Thesis 1 – Ineffective inventory management to continue weighing down on margins
Resultant discounted sales to clear inventory stockpile have weighed down on gross margins
28% 31% 30% 28%
-4%
5% 6%
8%
36%
46% 44%
30%
22% 26% 27%
11%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Sales Growth Inventory Growth
2015A 2016A 2017A 2018A
High growth phase Slowing growth
0.94x 0.97x 1.00x
0.93x 0.94x
1.02x
0.74x
0.69x
0.79x
0.68x
0.78x 0.75x
0.67x
0.57x 0.64x 0.66x
0.57x
0.52x
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Nike Adidas Under Armour
Off-price products
49%
48%
46%
48% 47%
45%
45%
46% 46%
43%
45%
45%
2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Gross margins have fallen gradually since 2015
UA Threadborne Siro
USD17.99 USD29.99
UA Packable Duffle Bag
USD20.99 USD34.99
UA Threadborne Blur
USD50.00 USD100.00
Source: Capital IQ 8
9. LPHA CAPITAL
Despite management’s attempts to bring down inventory growth, the inventory buildup issue is likely to persist in the short to medium term, contrary to overly-optimistic
views from brokers and investors.
Difficult for inventory growth to normalize in the short term No desirable way to deal with inventory buildup
Investment Thesis 1 – Ineffective inventory management to continue weighing down on margins (cont’d)
Gross margins expected to remain low
49%
48%
46%
48% 47%
45%
45%
46% 46%
43%
45%
45%
43% 43%
44% 44%
45% 45%
2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019 2020 2021 2022
Historical Forecast
✓ Under Armour has shown commitment to bring down inventory growth, as
seen in 2018Q2’s inventory growth of only 11% compared to management
guidance of 20%
✓ Management is further guiding for inventory growth for FY2018 to be in the
low single digits
✓ While this is possible, there remains a huge buildup of inventories from the
mismatch of inventory and demand over the past few years
✓ Clearing this buildup of inventories will continue to weigh down on margins
in the short to medium term
Accumulation of
buildup due to
mismatch of
demand and
supply
Selling at discount
Inventory writeoff
(USD5.1m was written off in 2017)
Source: Alpha Capital 9
10. LPHA CAPITAL
✓ 2015 investor day: Stated intention to enter the
market, repeated desire in 2017 and 2018
✓ Late entrant: no experience and brand equity
✓ Unable to enjoy same growth as peers
31,565 41,060 47,389
19,450
26,614
31,214
2012A 2017A 2022E
Performance apparel Athleisure
✓ Its ambassadors are performance athletes, not style icons
✓ Poorly positioned to enter the market as it is recognized as performance
brand, and products are viewed as “too sporty” for athleisure
✓ Lack of commitment to athleisure market, with management continuing
to focus on performance aspect of products
✓ Promoted celebrity ambassadors through Dwayne Johnson and Gisele
Bündchen, but showcased them in athletic instead of casual settings
✓ In 2016, launched Under Armour Sportswear, a high-end line combining
sports with fashion, but dissolved it in 2017
✓ Market leadership in bottom’s market
✓ USD4bn women’s sportswear business in 2012 drove
athleisure sales
✓ 5-year strategic plan in 2015: extend capabilities to fashion,
emphasize on “sports being a lifestyle”
✓ Marketing through style icons (e.g. Kanye West)
✓ Celebrity-backed marketing plan (e.g. Rihanna, Kylie
Jenner) from 2014 to promote athleisure products
Global peers have experienced stronger growth due to the athleisure trend, where sports apparel are worn for casual purposes. Despite growth opportunities offered by the
athleisure market, Alpha Capital is critical of Under Armour’s ability to gain market share due to its late entry and weak non-targeted marketing strategies.
Late to the now-concentrated athleisure market Weak non-targeted marketing strategies
Investment Thesis 2 – Inability to capitalize on fast-growing, high-margin athleisure market
Athleisure growing faster than performance apparel market in US
Market size (USDmn)
Competitors’ strategies are targeted at athleisure market
Under Armour’s strategies are not well-tailored to athleisure
Source: Alpha Capital, Euromonitor, news run 10
Competitors have existing presence in athleisure market
Under Armour late to the athleisure market
Established
since 2008
Established
since 2011
11. LPHA CAPITAL
Reliance on the use of discounts and inter-channel cannibalization pose roadblocks against a shift towards DTC channels, which further impedes Under Armour’s plans for
margin expansion.
Investment Thesis 3 – Inability to pivot to Direct To Consumer (DTC) channels for margin expansion
Management shift to DTC in pursuit of higher margins Cannibalization by wholesale partners to hurt DTC strategy
Continual use of discount wholesale channels
Wholesale:
61% of 2017
revenue
DTC:
35% of 2017
revenue
Increase in margins due to higher DTC mix is overly optimistic
✓ Management pushing for DTC sales over
wholesale for margin expansion
✓ Based on management expectations of
2018 margins, 2018Q4 GPM expected to
increase 90bps yoy, which Alpha Capital
finds to be overly optimistic
Cannibalization 1: wholesalers selling same product at lower prices
UA Speedform Intake 2 USD100
USD90
(comes with USD10 voucher
to be used within a week)
Cannibalization 2: newly launched products & bestsellers sold at
both wholesalers’ website and Under Armour’s website
UA HOVR Phantom
(3rd best selling footwear)
UA HOVR Havoc Low
(New arrival on UA website)
✓ Very little reason for consumers to buy via DTC channels as wholesalers
are offering cheaper prices, loyalty programs and wider selection
✓ Cannibalization of premium products to increase as Dick’s would start
selling more premium merchandise such as The Rock’s products
✓ Competitors such as Nike and Adidas are more selective with which
wholesale partners can hold their premium products, breeding
exclusivity
Source: Alpha Capital, Annual Report, news run 11
✓ Consumer perception of Under Armour could shift to that of a low-end
brand, following massive discounting in recent times
✓ This would lead to Under Armour continually selling lower-priced
products and having to generate revenue through low-price wholesale
partners
Low-price retailer
Sports-focus retailer
✓ Under Armour products have ”delivered very
strong growth”
✓ “Significant declines in Under Armour sales”
✓ Scaled back on Under Armour inventory
12. LPHA CAPITAL
Alpha Capital believes Under Armour’s restructuring plans to be ineffective in providing annual savings beyond 2019, contrary to what management proclaims.
Investment Thesis 4 – Restructuring plans likely to be ineffective in generating savings for the firm
2017 restructuring has not provided significant tangible cost savings
Inadequate visibility from management on restructuringAnticipated 2018 restructuring costs
Breakdown of restructuring costs Amount
Inventory writeoff USD5.1mn
Goodwill impairment USD28.6mn
Property & equipment impairment USD30.7mn
Employee-related costs USD14.6mn
Intangible asset impairment USD12.1mn
Contract exit costs USD12.0mn
Others USD26.1mn
✓ No clear justification behind announced expected USD75mn cost savings
✓ Only 2 restructuring items could potentially bring future cost savings:
▪ Employee-related costs, which include cost related to releasing staff in low-growth stores
▪ Contract exit costs, which include cost related to exiting from distribution facility space as
Under Armour plans to reduce SKUs in future
“Accordingly, we anticipate completing our diligence and recording all related one-time charges by
the end of this year with respect to the approximate USD75mn in annual savings that we
previously cited for 2019 and beyond”
CFO Dave Bergman (2018Q2 earnings call)
Breakdown of restructuring costs Amount
Inventory-related charges c.USD10mn
Intangibles and other asset-related
impairments
c.USD15mn
Facility and lease terminations c.USD55mn
Contract terminations and other
restructuring charges
c.USD50mn
✓ Additional USD80mn to pursue opportunities to
“better align cost structures with long-term goals”
USD210mn in
restructuring
charges
Inventory-related
charges and
asset-related
impairments
✓ Charges relate to disposal of inventory outside of
current liquidation channels
✓ Magnifies the issue that inventory buildup is
getting harder to clear
Facility and lease
terminations and
contract
terminations
✓ Plans to open stores in growth regions (to end
2018 with c.330 stores from 302 as at 2018Q2)
✓ Terminating leases is one-off cost that will not yield
savings (net # of stores still increase)
Additional
USD80mn
charges
✓ USD80mn is more than half of previous
restructuring guidance, and there is lack of clarity
regarding what these charges will be used for
Source: Alpha Capital, Annual Report 12
13. LPHA CAPITAL
Despite Asia being a growth story for consumer discretionary in general, market consensus is overlooking the fact that it takes more than a few financial years to get a
foothold in a competitive market, especially with the Chinese population which may not be receptive to a foreign and relatively unfamiliar brand.
Investment Thesis 5 – Bullish APAC growth projected by consensus failing to materialize in the short to medium term
Market is overly bullish on Under Armour’s potential in APAC Likely poor adoption in China
Alpha Capital forecasts APAC exposure growth to be modestAPAC makes up only 8.7% of Under Armour’s total revenue
12% 12% 11% 10% 10%
4% 5% 7% 3% 3%
23% 22% 22% 22% 23%
2018E 2019E 2020E 2021E 2022E
China Japan India
Bulls anticipate Under Armour to capture growth in China and Japan
Sportswear market growth
84%
61% 55%
43% 43% 41% 35%
82%
62%
53%
44% 46% 42% 40%
Adidas Nike Li-Ning Anta Puma Under
Armour
361˚
Athletic Apparel Athletic Shoes
% of current purchasers in China who would buy brand again
APAC
9%
Others
91%
✓ Under Armour has traditionally focused
on the North American market
✓ To get exposure to the growing APAC
market, Under Armour must:
▪ Compete with established brands
such as Nike and Adidas, which
means more SG&A expense as
providing discounts on new
products is unlikely
▪ Open new stores which would
incur more lease and salary
expense
Revenue breakdown by
region
3.7%
5.6%
8.7% 9.0% 9.3% 9.8% 10.2% 10.7% 11.3%
2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E
Under Armour’s APAC revenue share
Source: Alpha Capital, Euromonitor, Capital IQ 13
14. LPHA CAPITAL
Kevin Plank’s poor performance in guiding Under Armour is likely to persist given his entrenched ownership of the company via the holding of class B shares that have
superior voting rights.
Investment Thesis 6 – Poor corporate governance yet to be fully priced in
Non-optimal governance structure Continued misalignment of CEO’s interests
Uninspiring management team at the helmSuspicious financials
Board structure
Ownership and
control
✓ Kevin Plank holds both positions of CEO and
Board Chairman, which undermines
effectiveness of board oversight
✓ Plank holds c.16% of total shares yet controls
c.65% of voting rights
Goodwill impairment
✓ USD558mn goodwill recorded for acquisition
of Connected Fitness in 2015; business has
been underperforming
Questionable
transactions
Insider selling
✓ Plank found building an empire outside Under
Armour, funnelling USD715mn and human
capital to these projects
✓ Instead of leading a recovery, Plank sold
shares worth USD72mn in 2016, which
portrays weak business confidence
Investment income
masking slowing
organic growth
✓ Under Armour increased stake in its
Japanese licensee to 29.5%; shift to equity
accounting artificially inflates financial figures
Management turnover
rate
✓ High turnover amongst Under Armour’s
executives paint a bleak picture of its stability
and growth prospects
Underwhelming CEO
✓ Plank has been named one of the worst
CEOs in US and has been blamed for Under
Armour’s less than satisfactory performance
Source: Alpha Capital, news run 14
15. LPHA CAPITAL
Alpha Capital is bearish on Under Armour’s growth and margins rebound story contrary to brokers’ beliefs. Weak growth and continually sluggish margins are key reasons
behind Alpha Capital’s conviction to short.
Alpha Capital Estimates
Revenue projections (USDbn) Margins projections
Geographical mixLeverage ratios
4.98
5.20
5.38
5.54
5.67 5.80
5.18
5.40
5.62
5.86
6.10
2017A 2018E 2019E 2020E 2021E 2022E
Alpha Capital estimates Brokers' consensus
43.9% 44.0%
45.0%
45.1%
46.7%
3.0%
2.8%
-1.0%
2.4%
4.8%
Gross margins Profit margins
77.8% 77.6% 77.4% 76.9% 76.4% 75.7% 75.1%
9.6% 9.6% 9.5% 9.5% 9.5% 9.6% 9.6%
8.9% 9.2% 9.5% 9.9% 10.4% 10.9% 11.4%
3.7% 3.6% 3.6% 3.6% 3.7% 3.8% 3.8%
2017A 2018E 2019E 2020E 2021E 2022E 2023E
North America EMEA Asia Pacific Latin America
Gradual diversification away from NA market
0.19x
0.26x
0.46x 0.47x
0.53x
0.39x
0.33x 0.30x
0.26x 0.25x 0.24x
D/E ratio
Ramp-down of debt due to cash sweep and revolving debt facilities
Source: Alpha Capital, broker reports 15
16. LPHA CAPITAL
Alpha Capital’s internal DCF model yields an implied share price of USD10.2, giving a range of USD8.5 – USD12.5 per share under sensitivity analysis to a range of
terminal growth rates (2.25% – 2.75%) and WACCs (6.17% – 7.17%).
Alpha Capital DCF Model
Sensitivity analysis of enterprise value (USDmn) Sensitivity analysis of price target (USD/share)
Discount rate inputs
Terminal growth rate
WACC
2.00% 2.25% 2.50% 2.75% 3.00%
5.67% 5,885 6,264 6,704 7,219 7,830
6.17% 5,180 5,466 5,791 6,164 6,595
6.67% 4,628 4,850 5,100 5,380 5,700
7.17% 4,185 4,362 4,559 4,777 5,021
7.67% 3,822 3,966 4,124 4,298 4,491
Terminal growth rate
WACC
2.00% 2.25% 2.50% 2.75% 3.00%
5.67% 11.9 12.8 13.8 14.9 16.3
6.17% 10.3 11.0 11.7 12.5 13.5
6.67% 9.1 9.6 10.2 10.8 11.5
7.17% 8.1 8.5 8.9 9.4 10.0
7.67% 7.3 7.6 8.0 8.4 8.8
Source: Alpha Capital 16
Enterprise value to equity value bridge
5,110
4,528
779 197
Enterprise
value
Debt Cash and
cash
equivalents
Equity
value
USDmn
✓ No minority
interest or
preferred shares
✓ Based on
2018Q2 net debt
of USD583mn
CAPM Inputs Source
Risk-free rate 3.0% US10Y Treasury Bond Yield
Market return 8.1% Aswath Damodaran
Beta 0.78 Levered using peer group unlevered beta of 0.69
Cost of equity 7.0%
7.0% cost of equity
&
4.8% cost of debt
WACC of 6.67%
Long-run D/E ratio of 0.15
Marginal tax rate of 21%
17. LPHA CAPITAL
3.7x 1.9x 6.8x 1.4x 0.8x 0.8x
25.6x
15.7x
27.8x
16.7x
7.4x
13.3x
30.1x
18.3x
32.9x
20.9x
9.4x
25.9x
72.2x
28.5x
60.2x
39.0x
23.2x
69.8x
On a LTM EV/EBITDA basis, Under Armour is currently trading at a significant premium to peers (27.6x vs peer group average of 17.8x). This is largely due to perceived
growth potential in the short to medium term, which Alpha Capital highly doubts will be realised.
Comparable Companies Analysis
3.4x 1.8x 5.9x 1.3x 0.8x 0.8x
22.3x
14.2x
23.7x
13.7x
7.2x 10.1x
26.1x
16.8x
28.0x
16.8x
8.9x
15.1x
31.5x
24.1x
41.2x
28.4x
15.5x
24.0x
3.4x 1.7x 6.2x 1.3x 0.7x 0.7x
22.3x
13.0x
24.8x
12.5x
6.7x 9.5x
26.1x
15.3x
29.3x
15.1x
8.2x
13.8x
31.5x
21.7x
43.4x
25.1x
14.0x
21.6x
EV/Revenue EV/EBITDA EV/EBIT P/E
USD135,135mn USD49,442mn USD20,545mn USD7,455mn USD4,434mn USD2,766mn
USD133,700mn USD49,056mn USD19,868mn USD7,369mn USD3,772mn USD2,763mn
LTMmultiplesNTMmultiplesFY19multiples
Market cap
EV Average
EV/Revenue: 2.6x
EV/EBITDA: 17.8x
EV/EBIT: 22.9x
PE: 48.8x
EV/Revenue: 2.3x
EV/EBITDA: 15.2x
EV/EBIT: 18.6x
PE: 27.4x
EV/Revenue: 2.3x
EV/EBITDA: 14.8x
EV/EBIT: 18.0x
PE: 26.2x
Source: Capital IQ 17
18. LPHA CAPITAL
52-week trading range
✓ Low: USD11.6 (3 Nov 2017)
✓ High: USD24.3 (8 Jun 2018)
Brokers’ price targets
✓ Low: USD13.0 (J.P. Morgan)
✓ High: USD25.0 (Barclays)
CoCo’s LTM EV/EBITDA
✓ Based on LTM EBITDA of
USD329mn
CoCo’s FY2019 EV/EBITDA
✓ Based on FY2019 EBITDA of
USD503mn
CoCo’s LTM EV/EBIT
✓ Based on LTM EBIT of
USD147mn
CoCo’s FY2019 EV/EBIT
✓ Based on FY2019 EBIT of
USD281mn
CoCo’s NTM P/E
✓ Based on NTM earnings of
USD128mn
CoCo’s FY2019 P/E
✓ Based on FY2019 earnings of
USD161mn
DCF
✓ Based on 6.67% WACC and
2.5% terminal growth rate
8.5
7.8
6.9
7.6
5.0
10.3
9.0
13.0
11.6
12.6
10.8
8.8
13.4
8.3
21.3
16.0
25.0
24.3
Trading comparables and Alpha Capital’s DCF valuation indicate that Under Armour’s share has been grossly overvalued by brokers and investors.
Valuation Summary
USD per share
Source: Alpha Capital, Capital IQ, broker reports 18
TP:
USD11.7
19. LPHA CAPITAL
Alpha Capital is bearish on Under Armour’s growth and margins rebound story contrary to brokers’ beliefs. Weak growth and continually sluggish margins are key reasons
behind Alpha Capital’s conviction to short.
Investment Catalysts
Alpha Capital EPS estimates against brokers’ consensus Alpha Capital predicts earnings miss for upcoming FYs
One restructuring announcement away from troubleNews on further discounted sales
EPS estimates 2018E 2019E 2020E
Barclays 0.20 0.35 0.60
Credit Suisse 0.18 0.35 0.47
Evercore ISI 0.16 0.35 0.60
UBS 0.17 0.29 0.40
J.P. Morgan 0.15 0.20 0.33
Median 0.17 0.35 0.47
Alpha Capital 0.06 0.36 0.36
vs median -65% 3% -23%
Under Armour to miss street estimates for the 3 upcoming FYs
Management may do one of the following:
✓ Revise earnings downwards
✓ Implement additional restructuring efforts
✓ Reiterate current earnings guidance
Negative signal to spark selloff of shares
✓ After Dick’s Sporting Goods missed sales expectation on 29 Aug 2018,
they blamed Under Armour for moving into low-price retailers; news of
Under Armour’s discounted sales led to its share price falling as much as
7% during the trading day
✓ Under Armour has a serious inventory buildup issue that cannot be solved
just by providing discounts; it wrote off USD5.1mn of inventory in 2017
✓ With historical inventory growth rate higher than sales growth rate, Alpha
Capital expects Under Armour to accumulate inventory buildup in the next
3 financial years
✓ Future news on discounted sales and inventory write-offs will send
negative signals to the market
Market will catch on to Under Armour’s failing restructuring efforts
2017:
✓ Incurred USD129mn
in restructuring costs
Jul 2018:
✓ Identified additional
USD80mn
restructuring cost
Feb 2018:
✓ Announced
restructuring plan of
c.USD110 – 130mn
Source: Alpha Capital, broker reports 19
20. LPHA CAPITAL
The following upside risks would jeopardise a short position in Under Armour: (1) execution risks, (2) improving inventory management and (3) restructuring efforts
successfully translating to long-term cost cutting, (4) successful penetration into athleisure market and (5) materialization of consensus’ margin rebound story.
Investment Risks
EvaluationDescriptionUpside risks
Execution risks to short-selling
Better inventory management
Successful penetration into
athleisure market
Restructuring efforts resulting in
cost cutting
✓ Risky strategy to hold a short position for a medium-term
to long-term horizon
✓ Short-term loss positions are likely
✓ Miscellaneous costs include margin interest and
dividends
✓ Historically, Under Armour has revised earnings
downwards 30 times and upwards 0 times
✓ Under Armour is not dividend-paying, hence cost to short
would not include dividends
✓ Inventory turnover could improve to levels of peers
✓ An increase in inventory turnover would reduce
discounted sales, leading to higher profit margins and
higher EPS
✓ Restructuring changes involving leases, employees and
contracts could result in positive long-term cost benefits,
resulting in higher EPS
✓ Alpha Capital estimates EBITDA margins to be 9.0%,
9.3% and 9.5% for 2018E, 2019E and 2020E
respectively
✓ There is an upside risk that EBITDA margins can climb
back to higher historical ranges of 11.7% – 13.5%
✓ Inventory turnover tends to be sticky and is not likely to
improve drastically in the short to medium term
✓ Restructuring has historically not been effective
✓ No net benefit as cost cutting in low-growth areas is
counteracted with expansion in high-growth areas
✓ Margin rebound story is already priced in
✓ EBITDA margin of 13.5% from 2018E – 2023E will result
in a implied price of USD18.3 per share, still below
current price
EBITDA margin rebound
✓ Growth would rebound and margins would expand if
Under Armour can get a foothold into the athleisure
market
✓ Under Armour has tried and failed to enter the market
✓ Market is competitive, with different brands already
establishing presence, making it difficult to penetrate
Source: Alpha Capital 20