UAA - Valens Credit Report - 2023 11 06
Credit markets are overstating UAA's credit risk with a YTW of 7.044% relative to an Intrinsic YTW of 6.297% and a CDS of 262bps relative to an Intrinsic CDS of 146bps. Furthermore, Moody's is overstating UAA's fundamental credit risk with its Ba2 credit rating four notches below Valens' IG4+ (Baa1) credit rating.Earnings Call Forensics™ of the firm's Q1 2024 (08/08/2023) earnings call highlights that management is confident they are making progress with the evolution of their overall social media approach and that UA rewards will be rolled out more broadly to stores in the fall. Furthermore, management generated an excitement marker when saying SlipSpeed shoe technology is a great innovation, and they are confident they remain focused on pushing growth of big product items.
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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