UAA - Valens Credit Report - 2023 01 27
Credit markets are overstating credit risk with a YTW of 6.324%andaCDSof248bps relative to an Intrinsic YTW of 5.570% and an Intrinsic CDS of 167bps.Furthermore, Moody's is overstating UAA's fundamental credit risk with its Ba2credit rating four notches below Valens' IG4+ (Baa1) credit rating.Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. Executive Chairman Plank and COO Browne are material owners of UAA equity relative to their annual compensation, indicating they could persuade other NEOs to align with shareholders to pursue long-term value creation for the company. Furthermore, most management members have low change-in-control compensation relative to their annual average compensation, indicating they are less likely to pursue a takeover or sale of the company, reducing event risk for creditors.
Earnings Call Forensics™ of the firm's Q2 2023 earnings call (11/3) highlights that management is confident they can compete in the athletic wear space and execute the strategic shift to see more sustainable and profitable growth. Furthermore, they are confident they can produce designs with clean aesthetics and cultural style as they develop more casual wear and can expand their current customer base. Lastly, they are confident they have invested in improving order management and point-of-sales systems at physical locations, that FX rates are becoming more favorable, and that declining air freight utilization will become a tailwind for the business in the third quarter.
Under Armour is engaged in the development, marketing and distribution of apparel, footwear and accessories for men, women and youth. The company provides HEATGEAR?, which is designed to be worn in warm to hot temperatures under equipment or as a single layer; and COLDGEAR?, which is designed to wick moisture from the body while circulating body heat from hot spots to help maintain core body temperature. The company's footwear products include running, basketball, cleated sports, slides, training, and outdoor. The company provides digital fitness subscriptions, along with digital advertising through its MapMyFitness, MyFitnessPal and Endomondo applications.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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