Under Armour, Inc. (UA) stock intrinsic value fair value estimate & owner earnings analysis

Under Armour designs and sells athletic apparel, footwear and accessories under the Under Armour brand. It sells through wholesale partners and through its own stores and e-commerce. In the fiscal year ended March 31, 2026, revenue was $4.97 billion. North America (the United States and Canada) brought in about 58% of that, Europe, the Middle East and Africa about 24%, Asia-Pacific about 14% and Latin America about 5%. Revenue has stayed between roughly $4.5 billion and $5.9 billion in every year of the last decade, which shows the brand lasts. What it shows less clearly is how much cash the brand earns for shareholders. That cash record is volatile. We measure what an owner could take out each year: operating cash flow, with working-capital swings removed, minus stock-based pay and the capital spending needed to keep the business running. On that basis, results per share were about 47 cents in 2019, a loss of 30 cents in the 2020 pandemic year, $1.20 in the 2021 rebound, 44 cents in the year to March 2023 and 50 cents in the year to March 2024. The last two years were negative on paper: a loss of 57 cents to March 2025 and a loss of 25 cents to March 2026. Much of that came from lawsuits rather than from running the business. In fiscal 2025 the company paid $434 million to settle a shareholder class action, $63 million of it funded by insurance, and booked a net cost of $261 million. In January 2026 an appeals court ordered it to repay $90 million of insurance money, and it paid that during the year. Adding back those two one-time items leaves roughly break-even: about 3 cents a share in fiscal 2025 and a loss of about 4 cents in fiscal 2026. We treated them as one-time. We did not treat restructuring costs that way. Under Armour has run restructuring programs in 2017, 2018, 2020 and again under its 2025 plan, so their cash costs stay in our figures as a recurring cost of this business. One accounting choice: the company's 'changes in reserves and allowances' line (returns and inventory reserves) is treated as part of working capital, so inventory write-downs count as a real cost. Our starting level is about 24 cents per share a year. That is the middle of the results from 2018 through March 2026, with the lawsuit items removed. That period covers a full cycle for the company as it exists after its 2017-2018 reset: restructuring, a normal year, the pandemic, a boom and the current downturn. Earlier years had much heavier building spending and describe a different, faster-growing company. The near term is weak. In fiscal 2026 revenue fell 3.8%, North America fell 7.9%, footwear fell 10.8% and gross margin dropped 2.4 points to 45.5%. The company says about $70 million of that year's cost came from tariffs. The Supreme Court struck those tariffs down in February 2026, and a refund process opened in April 2026, but the company has recorded no refund, and neither do we. Against that, the insurance repayment will not recur, and the 2025 restructuring plan (about $305 million in total, of which $260.7 million had been recorded by March 2026) is expected to be largely finished by December 2026. In the first quarter to June 30, 2026, operating cash flow was $109 million against $49 million a year earlier, and operating income was $47 million against $3 million. We treat one quarter as a direction, not a new level. Base case: owner earnings of about 12 cents a share this fiscal year, while the last restructuring cash is spent. They reach about 20 cents the year after and settle at 24 cents, with no growth assumed. Revenue has fallen for three years in a row, and nothing in the filings shows a return to growth yet. We keep that level beyond year ten because the brand has held about $5 billion of sales for a decade, and its regions earned $748 million before head-office costs even in a bad year. Discounted at 6%, this gives $3.85 per share. Bear case: North America keeps shrinking, as it did from $3.51 billion to $2.86 billion over two years. Tariff costs persist, restructuring continues, and a court ruling on interest owed to the insurers is still pending. Owner earnings stay slightly negative for two years, recover only to about 10 cents, and fade to nothing over the ten years after year ten. The company carries $400 million of notes due 2030 plus borrowings under its credit line, so weak years leave little room. This case gives $0.65 per share. Bull case: the restructuring works the way the 2017-2018 reset did, and EMEA (up 8.6%) and Latin America (up 8.7%) keep growing. Owner earnings return to the 44-50 cents a share the company actually produced in fiscal 2023 and 2024, and hold there. This gives $7.42 per share. We left out the 2021 figure as a pandemic-era peak, and we left out any tariff refund. The business earns a thin and uneven return on a large revenue base, and its record includes repeated restructurings and costly litigation. That calls for a wide margin of safety, and the margin-of-safety price is about $2.00 a share. It applies only after the current restructuring is finished and a full year of positive owner cash flow shows the recovery is real rather than hoped for. The case would be wrong if North American sales keep falling after the restructuring, or if new tariffs or legal costs replace the ones now ending.