GO
Loading...

Cramer: At $80 is UA expensive or still too cheap?

Tuesday, 10 Sep 2013 | 6:26 PM ET
Under Armour CEO: We're more than apparel, constantly evolving
Tuesday, 10 Sep 2013 | 6:25 PM ET
Mad Money host Jim Cramer speaks with Under Armour Kevin Plank about his business. Plank discusses why he doesn't fear Nike, and why he doesn't characterize his company as just apparel.

(Click for video linked to a searchable transcript of this Mad Money segment)

With shares marching from about $45 to just shy of $80 ytd, what does Cramer think of Under Armour, now?

If it were only a matter of looking at the company's execution the decision would be a no brainer.

Under Armour is "one of the best-run, most innovative companies in the entire apparel space, heck, one of the most innovative companies out there, period," said Cramer.

Recent results would seem to confirm his conclusion.

In July, Under Armour said it second-quarter net income more than doubled as consumers bought more of its athletic clothing and it expanded its shoe offerings. Results beat expectations with Under Armour reporting Q2 EPS of $0.16, $0.02 better than the analyst estimate of $0.14. Revenue for the quarter came in at $455 million versus the consensus estimate of $448.91 million.

Bob Thomas | Vetta | Getty Images

Also the company raised its revenue outlook for the year, to a range of $2.23 billion to $2.25 billion, representing growth of 22% to 23% over 2012.

"Simply terrific," Cramer said.

However, making money in the market involves strategic timing. And with shares trading at 52-week highs the issue becomes whether the time to buy is now.

"Under Armour stock has rallied 65% for 2013, and it's up 365% over the last five years, to the point where Under Armour now sells for 43 times next year's earnings with a 20.5% long-term growth rate. You could make the argument that the stock is too expensive at these levels," said Cramer.

--------------------------------------------------
Read More from Mad Money with Jim Cramer
Cramer: Q4 explosive for these stocks?
Would Cramer buy this biotech?
Major catalysts being overlooked by Street?
--------------------------------------------------

Cramer, however, doesn't think that's the best argument.

Instead his comments suggest that because the stock has momentum and growth it rightfully commands a higher valuation.

And during Mad Money's exclusive interview with Kevin Plank, the founder, chairman and CEO of Under Armour, Cramer learned the company should still have huge growth ahead. "Under Armour is a $10 billion brand doing $2 billion today," Plank said

By the end of the interview Cramer commented that, "The market cap is too small for the idea. I think the move could actually still be in its infancy."

Read More: Cramer's performance test: Under Armour vs. Nike

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

  Price   Change %Change
UA
---

Featured

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.