What Happened?

Shares of athletic apparel company Under Armour (UA) jumped 32.7% in the morning session after the company reported impressive third-quarter earnings, which blew past analysts' operating margin and EBITDA expectations. Notably, under its new leadership, the company is shifting its ecommerce and retail strategy towards a more premium offering, which has led to improvements in average order value and higher margins in the DTC (Direct to Consumer) channel.

Looking ahead, the company raised its full-year adjusted operating income guidance. This is a great sign as many companies changing their strategy often have to endure some pain in profitability due to investments before things get better. UAA seems to be able to pivot and do so without hurting its financial profile thus far. Overall, this was a good quarter, and the market seems excited about margins and guidance.

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What The Market Is Telling Us

Under Armour’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Under Armour and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 19.6% on the news that the company reported strong second-quarter earnings results. Under Armour blew past analysts' constant currency revenue expectations. Its EPS also outperformed Wall Street's estimates. Moving on, full year EPS guidance was above expectations, which was icing on the cake. Zooming out, we think this was certainly a solid quarter.

Under Armour is up 33.8% since the beginning of the year, and at $11.61 per share, has set a new 52-week high. Investors who bought $1,000 worth of Under Armour’s shares 5 years ago would now be looking at an investment worth $660.03.

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