Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. Yet they only buy stock for one reason – they expect it to rise.
In this report, we are going to highlight some interesting insider buying at Under Armour Inc (UAA:US). Under Armour is an American company that specializes in sports apparel. Founded over 25 years ago, it sells its products in more than 100 countries worldwide today. The company is listed on the New York Stock Exchange and currently has a market capitalization of $4.49 billion.
Under Armour Inc: Insider Buying
Our data shows that between May 27 and May 31, board member David Gibbs purchased 50,000 UAA shares at an average price of $9.50 per share. This trading activity cost the insider around $474,800 and increased his holding from zero shares to 50,000 shares.
First Insider Purchase Since 2018
This trade is worth highlighting for a couple of reasons. Firstly, insider purchases at Under Armour are not very common. This trade represents the first purchase from an executive or director since May 2018. This suggests that Mr. Gibbs sees value in the stock right now.
Secondly, Mr. Gibbs has made a substantial purchase. The fact that the insider has spent nearly half a million dollars on stock indicates that he is confident the stock is set to go higher. Our Insider Model sees his trading activity as bullish.
Share Price Fall
UAA shares tanked in May after the company posted disappointing guidance.
In its Q1 results, Under Armour said that for 2023, it expects to post adjusted earnings per share (EPS) of 63 cents to 68 cents. Analysts had been expecting adjusted EPS of 83 cents. The company blamed higher freight costs and Covid-19 curbs in China for the below-par outlook.
However, management was confident that the group can bounce back in the long run.
"As global supply challenges and emergent Covid-19 impacts in China eventually normalize, we are confident that the strength of the Under Armour brand coupled with our powerful growth strategy positions us well to deliver sustainable, profitable returns to shareholders over the long-term," said Under Armour President and CEO Patrik Frisk.
The company noted that it expects to generate revenue growth of 5-7% for the year, despite capacity issues, supply chain delays, and emergent Covid-19 impacts in China.
The large purchase from Mr. Gibbs indicates that he believes the stock will bounce back as business conditions improve. We see this insider buying as a bullish indicator.