Adidas vs. Nike vs. Under Armour: Stocks Compared for 2022

Adidas AG (ADDYY), Nike Inc. (NKE), and Under Armour Inc. (UAA) are three of the largest retailers in the highly competitive athletic apparel industry. Sportswear companies make and sell clothing designed for athletes and people with active lifestyles, including running shoes, shorts, T-shirts, tracksuits, swimsuits, and more. The global sports apparel market generated $188.2 billion in revenue during 2020, up 4.0% compared to the previous year. The COVID-19 pandemic hampered the sales of many sportswear companies in 2020, but athletic apparel in particular was more resilient than the broader apparel industry. Total revenue for the global sports apparel market is expected to rise 2.0% to approximately $192.0 billion in 2021.

Adidas vs. Nike vs. Under Armour
  Price Market Cap 1-Year Total Returns P/E Ratio
Adidas AG (ADDYY) $140.00 $54.6 B -16.5% 27.8
Nike Inc. (NKE) $165.39 $261.8 B 22.3% 43.9
Under Armour Inc. (UAA)  $22.25 $10.6 B 31.6% 23.7

Source: YCharts as of Dec. 13, 2021

One-Year Total Return for Adidas, Nike, and Under Armour
Source: YCharts.

Adidas AG (ADDYY)

The pandemic severely impacted Adidas' business in 2020, especially in the first half of that year due to temporary store closures. Most of the company's stores reopened by the end of the year, with the exception of its stores in Europe. But the pandemic prompted Adidas to focus on bolstering its ecommerce sales channels. Ecommerce revenues rose 53% in 2020, accounting for more than 20% of the company's total sales. Total revenue sank 14% in currency-neutral terms.

Adidas started 2021 with first-quarter sales up 27% in currency-neutral terms despite ongoing lockdowns in Europe and industry-wide supply-chain challenges. However, it missed earnings per share (EPS) estimates by 30.9%. Strong growth continued in the second quarter, with currency-neutral sales up 55% even with extended lockdowns in the Asia-Pacific region. The results prompted Adidas to raise its full-year outlook for 2021. Late in the second quarter, the company announced a new share buyback program to be executed in the second half of the year.

Sales growth slowed to 3% in currency-neutral terms during the third quarter. Geopolitical tensions hurt Adidas' Greater China sales, which declined 15%. Adidas and other Western companies publicly raised concerns about allegations of forced labor in China's Xinjiang region, prompting Chinese consumers to boycott Adidas products earlier in the year.

During the quarter, Adidas announced plans to sell Reebok to Authentic Brands Group for as much as $2.5 billion. In October, the company announced that it would begin another new share repurchase program after completing in September the program it announced in late June.

Currently, 16 analysts out of 29 have a buy rating for Adidas' stock, while one gives it an overweight rating, 10 give it a hold rating, and two an underweight rating. There are no analysts who currently recommend selling the stock.

Nike Inc. (NKE)

The pandemic drove Nike to accelerate its pivot toward its ecommerce channels. In the second quarter of the company's 2021 fiscal year (FY), the three-month period ended Nov. 30, 2020, Nike's digital sales rose 84% (80% on a currency-neutral basis) while companywide revenue grew just 9% (7% on a currency-neutral basis). Nike had already been investing in its online direct-to-consumer business prior to the pandemic. As a result, the company was in a stronger position than many rivals to ramp up ecommerce sales when the pandemic began. That showed in Nike's results. Its second-quarter EPS was 25.8% higher than the consensus of analysts' estimates.

Disruptions related to the pandemic continued to impact Nike's results in its fiscal third quarter, ended Feb. 28, 2021. Revenue rose 3% (but fell 1% on a currency-neutral basis). Congestion in U.S. ports and ongoing store closures in Europe were a drag on Nike's sales. However, digital sales continued to deliver strong growth, up 59% (54% on a currency-neutral basis).

Nike's fortunes changed dramatically in its fiscal fourth quarter. It reported its highest quarterly revenue ever as its EPS beat consensus estimates by 82.4%. Fourth-quarter revenues rose 96% (88% on a currency-neutral basis) to $12.3 billion as the company's business rebounded from the negative impact of the pandemic in the prior year.

Despite the fourth-quarter rebound, global supply chain disruptions continued to weigh on Nike's first-quarter 2022 results. Though revenue came in below analysts' expectations, it was still up 16% (12% on a currency-neutral basis) for the year.

A total of 17 analysts out of 31 currently have a buy rating on Nike's stock. Nine analysts have an outperform rating, four a hold rating, zero an underperform rating, and just one analyst recommends selling the stock.

Under Armour Inc. (UA)

The pandemic also hurt Under Amour in 2020, with its annual revenue declining 15%. Like Adidas and Nike, the company's ecommerce sales helped to mitigate the impact of store closures. Under Armour's ecommerce sales grew 40% during the year. Its fourth-quarter EPS exceeded analysts' estimates by 300.0%.

In Under Armour's first quarter of 2021, the company raised its full-year outlook on optimism about the rebound in demand for its products. Sales were up 35% (32% on a currency-neutral basis), beating consensus estimates. EPS crushed analyst forecasts by 433.3% as ecommerce sales rose 69%.

Under Armour topped consensus estimates again in the second quarter, with EPS beating analyst forecasts by 300.0%. The company's sales, up 91% (85% on a currency-neutral basis), also beat expectations. It once again raised its full-year outlook for 2021.

It was a similar story in the third quarter of 2021, with strong EPS and sales prompting the company to raise its outlook for all of 2021. Revenue for the quarter rose 8% (6% on a currency-neutral basis). Under Armour posted those results despite a number of obstacles, including ongoing supply-chain problems. Factories in Vietnam, where about one-third of Under Armour's apparel and accessories are made, were forced to shut down due to COVID-19 outbreaks. The company said in early November that most of the factories were back up and running.

There are nine analysts that currently have a buy rating on Under Armour's stock out of a total of 26. Three analysts have an outperform rating, 11 have a hold rating, two have an underperform rating, and just one analyst recommends selling the stock.

The Bottom Line

Adidas, Nike, and Under Armour saw their business operations rebound in 2021 from the previous year's pandemic-related shock. All three have since dramatically expanded their ecommerce sales and continue to recover despite major supply chain disruptions. But investors aren't uniformly enthusiastic, as is illustrated by these three companies' significantly varying stock performance. Under Armour's shares have delivered a total return of 31.6% over the past 12 months, vastly outperforming the broader market. Nike has risen 22.3%. The big loser is Adidas, down 16.5% during that period. Despite its superior stock performance, Under Armour currently has the lowest price-to-earnings (P/E) ratio, indicating it is still relatively undervalued compared to the other two sportswear companies. Its earnings performance has also been stronger than that of Nike or Adidas. But it is Nike's stock that analysts are most optimistic about, with 26 of the company's analysts having either a buy or outperform rating on the stock, which is more than either of the other two companies has.

Article Sources
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