2017/01/11

3 Worst Sports Stocks Of 2016: Under Armour, Manchester United And Nike

Last year was arguably the greatest year in the history of sports. Usain BoltSimone Biles and Michael Phelps created Olympic memories for millions around the globe. Top storylines on the team side included the Chicago Cubs breaking a 107-year curse and the Cleveland Cavaliers ending their city's own 52-year title drought with a comeback from a 3-1 deficit to defeat the Golden State Warriors, fresh off a record regular season of 73 wins. The Villanova Wildcats won the NCAA tourney with a three-point buzzer-beater and Leicester City overcame 5,000-to-1 odds to win the Premier League in the most stunning underdog story in sports.
Stephen Curry's signature shoes helped boost Under Armour's fortunes, but the company's stock was hammered in 2016. (Photo by Jason Miller/Getty Images)

Good memories for fans. The memories are not so good for stockholders of three of the biggest names in sports. Under Armour (-40%), Manchester United (-19%) and Nike (-18%) delivered the three worst performances during 2016 out of 33 publicly-traded companies with an interest in the business of sports.

Under Armour was been a stock market darling as its sales grew ten-fold over the past decade. The brand owned 2015 with sales up 28.5% and UA endorsers Stephen Curry, Bryce Harper and Cam Newton winning the MVP awards in their respective leagues, while fellow UA endorser Jordan Spieth captured the PGA's Player of the Year award.

The company had 26 straight quarters of at least 20% sales growth, but the stock fell 14% on Oct. 25 after warning that growth would slow in the coming years. Profit margins are also expected to be hit by increasing levels of investment. The company is still targeting sales of $7.5 billion in 2018, compared to $4.7 billion for the latest 12 months.
UA's stock is off 40% since a new class of share began trading in March. Even with the big stock decline, Under Armour still trades at 39 times trailing earnings compared to 25 for the S&P 500.

Manchester United is one of the rare sports teams to trade on a U.S. stock exchange. Shares of the English soccer club plummeted early in 2016 amid concerns of the team's performance on the pitch, despite new sponsor deals with Adidas and Chevrolet worth nearly $200 million a year. United eventually finished fifth in the Premier League standings and will sit out Champions League for a second straight year. The stock finished off 19% for the year. The Red Devils currently sit sixth in the 2016-17 standings, but the stock is up 9% in the first few days of trading in the new year.

Sportswear giant Nike with $33.5 billion in sales was the third-worst performing sports stock of 2016, off 18%. It was also the worst among the Dow 30 stocks. Nike's stock had tripled over the previous five years, but ran out of gas last year after delivering a soft outlook for North American growth. The company did lock up two of its biggest brand ambassadorsLeBron James and Cristiano Ronaldo, over the past 13 months to "lifetime" deals that could be worth as much as $1 billion for each global icon.

After lagging behind Nike and Under Armour in recent years on both buzz and performance, Adidas rebounded in 2016. The stock jumped 64%, third best among all sports companies. Adidas brought in a new CEO in Kasper Rorsted after 15 years of Herbert Hainer a the helm and restructured to promote a more collaborative effort between its U.S. operations and German headquarters. Adidas passed Skechers to be the No. 2 footwear brand in the U.S. in part thanks to its relationship with Kanye West and the buzz around the West-designed Yeezy Boost sneakers.

The top performer in sports for 2016 was Johnson Outdoors, up 84%. The stock for the maker of outdoor recreation products was up more than 100% before reporting a quarterly loss in December, which sent shares down 22%.
    2016   TotalRecentMarket value Revenue
Company Returnprice($mil)PE($mil)
Johnson Outdoors84%$37.77$37728$434
Big 5 Sporting Goods8117.40381281,030
Adidas6476.6832,0862820,791
Dicks Sporting Goods5255.186,216197,679
Zumiez4522.7556628815
Vail Resorts29162.266,483411,605
Daktronics2811.0048450589
Cabelas2558.834,029244,199
Lululemon Athletica2469.419,515342,259
Hibbett Sports2337.8083013972
Black Diamond215.80174NA151
Columbia Sportswear2157.283,998242,359
Callaway Golf1711.691,10032862
Electronic Arts1580.6324,331214,543
Foot Locker1173.009,663167,660
Nautilus1119.5560919389
International Speedway1037.651,71423658
Brunswick956.435,061214,392
Speedway Motorsports821.8089625517
Churchill Downs7148.952,474291,303
Finish Line618.89766NA1,915
Madison Square Garden6176.154,221NA1,147
World Wrestling Entmt618.921,446NA700
Escalade313.4019218166
Liberty Media Braves*320.821,030NANA
Dover Motorsports12.30841947
Walt Disney1107.44170,9861955,368
Polaris Industries-284.875,437214,404
Arctic Cat-816.42214NA557
Sturm Ruger-952.901,00412655
VF Corp-1253.7222,2252212,594
Nike-1853.0788,3712333,508
Manchester United-1915.452,53460730
Under Armour*-4026.5712,494394,691
*Braves return since 1st day April close; UA return since new stock started trading in March.
NA: Not applicable. Source: FactSet Research Systems.

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