Shares of Under Armour jumped Thursday after the company beat earnings expectations, but Morningstar equity analyst Paul Swinand said he remains wary of the company's costs and efficiency.
Swinand said that a review of UA's earnings over the past three years shows operating margin has trailed revenues while share count has grown.
"While the company is doing very well, their operating margin has actually gone down over the last three years," he told CNBC's "Squawk Box." He was wearing Under Armour workout garb during the interview.
"I'm a fan of the company. I like that Kevin is making a big bet on connected fitness, too, but they're also spending a lot to do that. Operating margin is down. That's got to pick up at some point," he said, referring to CEO Kevin Plank.
Under Armour said selling, general and administrative costs grew 27 percent from last year, "primarily driven by investments in Direct-to-Consumer and overall headcount to support the Company's strategic initiatives."
The athletic apparel maker doubled estimates with quarterly profit of 4 cents per share, while revenue also beat Street estimates. Results were helped by strong apparel demand as well as launches of new running and basketball shoes.
The stock was trading about 7 percent higher on Thursday.
The company has posted revenue growth of 20 percent or better for the last three years, a feat that Swinand called "amazingly steady."
However, investors should keep in mind that growth is being underwritten by Under Armour's retail expansion, he said.
"If you grow that too big, you actually get operating deleverage if there's a downturn, so I'm a little bit wary of that," he said.