Under Armour Inc’s (NYSE:UAA): Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. On 31 December 2017, the US$7.27B market-cap posted a loss of -US$48.26M for its most recent financial year. The most pressing concern for investors is UAA’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for UAA’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Under Armour

According to the industry analysts covering UAA, breakeven is near. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$44.34M in 2018. UAA is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which UAA must grow year-on-year. It turns out an average annual growth rate of 46.06% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, I won’t go into detail the detail of UAA’s upcoming projects, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with UAA is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in UAA’s case is 45.43%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of UAA to cover in one brief article, but the key fundamentals for the company can all be found in one place – UAA’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:

1. Valuation: What is UAA worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether UAA is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Under Armour’s board and the CEO’s back ground.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.