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Under Armour is firmly back in “turnaround stock” territory. At roughly $6.75 per share, the market is betting that the worst of the reset is behind it, but not yet willing to pay up for a clean recovery story. Our latest deep-dive suggests that’s the right instinct: liquidity looks solid, yet the core operating engine – pricing power and gross margin in North America – still hasn’t earned the all-clear.

According to the company’s own filings, Under Armour’s December quarter (fiscal 3Q26) revenue fell 5% year-over-year to $1.33 billion and gross margin dropped 310 basis points to 44.4%, hit by tariffs and a more promotional environment in its largest market, North America 10-Q (2026), p.35. That’s not what sustained turnarounds are made of. Yet at the same time, the balance sheet shows $465 million of cash, about $600 million of restricted investments earmarked for a June 2026 maturity, and zero drawn on a $1.1 billion revolver 8-K (2026). Solvency isn’t the issue; margin structure is.

Our team currently rates the stock a WAIT with moderate conviction. We think the next one to two quarters will be decisive. If gross margin lifts back above roughly 45.5% and North America’s decline improves to better than -6% year-over-year, we’ll likely revisit that stance. If instead margins stay stuck around 44% and North America hovers near -10%, downside to intrinsic value opens up.

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Under Armour’s Turnaround Setup: What’s Actually Going On?

Under Armour is a global performance athleticwear brand selling apparel, footwear, and accessories across wholesale, owned stores, and e-commerce 10-Q (2026), p.31. The business model is straightforward on paper: wholesale drives scale, direct-to-consumer (DTC) drives data and brand presentation, and both together should leverage marketing and product innovation.

In practice, 2025–2026 has been anything but straightforward. Management is juggling three big initiatives:

Stabilizing North America and restoring pricing discipline, with the most recent December quarter characterized as the “most challenging phase” of the reset Under Armour IR PR, Feb 6 2026
Managing U.S. tariff shocks that they’ve warned could cut full-year profits by as much as 50% and that they don’t expect to fully offset until the next fiscal year through sourcing and price/mix actions Investopedia, Aug 2025
Executing an expanded restructuring plan (including separation of the Curry Brand) now totaling up to $255 million of pre-tax charges 10-Q (2026), p.32 and targeted to wrap by the end of FY26 Under Armour IR PR, Nov 13 2025

The result is a company that looks financially safe in the near term but operationally noisy and margin-challenged. That distinction – liquidity safety vs. earnings safety – is at the heart of our WAIT rating.

How the Numbers Really Look: Margins, Tariffs, and Promotions

A closer look at the gross margin squeeze

To understand the setup, we start with the December quarter’s gross margin bridge. Management broke down the 310 basis point gross margin compression to 44.4% as follows:

~200 bps from supply chain factors, including higher U.S. tariffs
~140 bps from more promotional pricing in North America
~40 bps from channel and regional mix shifts

This matters because the market narrative often sounds like “tariffs did it.” The filings tell a more nuanced story: tariffs are a big hit, but promotions and mix are piling on. That’s a very different risk profile. Tariffs are largely external and potentially temporary; promotional intensity and mix are more about brand power and execution.

For FY26, management still guides gross margin down about 190 bps, primarily due to higher tariffs, and revenue down roughly 4%, with North America down around 8% Under Armour IR PR, Feb 6 2026. On its face, that’s a shrinking, margin-compressing business – not a turnaround in full swing.

Our base case assumes:

Gross margin rebounds to about 45.5% as tariff mitigation and mix actions begin to help late in FY26
Adjusted EPS stabilizes around $0.10–$0.11

But that is contingent on Under Armour regaining some pricing discipline in North America and stopping the slide into structural promotions.

Revenue mix and why North America dominates the story

In fiscal 2025, wholesale represented about 58% of net revenues 10-K (2025), p.11, while North America alone accounted for approximately 60% of total revenue 10-K (2025), p.4. Those two facts together explain much of the volatility:

Heavy wholesale exposure means retailers’ ordering cycles and promotional demands have outsized influence.
North America concentration amplifies any regional demand shock or promotional war.

In the most recent quarter, North America revenue declined 10.3% year-over-year, while EMEA grew 6.0% and Latin America jumped 19.7% 10-Q (2026), p.32. That’s not a “global brand collapse” story; it’s a regionally uneven reset with North America still firmly in the penalty box.

The risk for investors is simple: if promotions in North America become the default, rather than a temporary reset tool, Under Armour trains both wholesalers and consumers to demand discounts. Filings explicitly warn that competitive pressure can force higher promotions and that refusing to join in can hurt near-term growth 10-K (2025), p.11. That’s the classic margin vs. volume trade-off – and right now, UA is losing on both fronts.

Is UA Stock a Buy in 2026 – Or Still a Wait-and-See?

From our perspective, Under Armour is in that frustrating middle ground: too cheap to ignore completely, but not cheap enough relative to the risks to justify a strong contrarian buy.

At $6.75, our scenario work implies:

Base case (50% probability): Fair value around $7.25
Bear case (30%): Fair value closer to $5.00 if promotions stay elevated and margins hover near 44%
Bull case (20%): Around $8.75 if North America improves to roughly -3% and gross margin returns toward 46.5%

In other words, the current price already bakes in some level of stabilization. There’s upside if management executes, but not a massive margin of safety if things disappoint.

We also set practical trading guardrails based on fundamentals:

Attractive entry zone: About $5.75 or below, where risk/reward starts to skew more favorably
Trim zone: Around $8.25 and above, where expectations for a clean turnaround start looking rich

These aren’t “price targets” in the Wall Street sense; they’re bands where we’d be more inclined to add or reduce based on the balance of scenarios.

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Margin of Safety: Liquidity Cushion, Not Earnings Cushion

One of the clearest positives in the Under Armour story is liquidity. As of December 31, 2025, the company reported:

$465 million of cash
About $600 million of restricted investments designated for June 2026 debt repayment
No borrowings under a $1.1 billion revolving credit facility

UA also issued $400 million of senior notes due 2030 and used proceeds plus other funds to satisfy and discharge notes due 2026 10-Q (2026), p.40. That effectively pre-funded the upcoming maturity and pushed out near-term refinancing risk SEC 10-Q (2026), p.40.

So why aren’t we more bullish?

Because this is a liquidity-driven margin of safety, not an earnings-driven one. The operating margin profile is still thin:

Gross margin is being hit from multiple sides (tariffs, promotions, mix).
The restructuring program remains active and costly through FY26 with up to $255 million in charges 10-Q (2026), p.32.
Management has explicitly signaled that, if conditions worsen, they may cut expenditures and marketing or use sale-leaseback transactions to preserve liquidity 10-Q (2026), p.50.

For equity holders, capital impairment risk is less about “will the company survive the next 12 months?” and more about “will the long-term margin structure end up permanently lower?” If UA can’t restore pricing discipline while tariffs persist, gross margin could remain pinned near the December-quarter trough rather than normalizing.

That’s why we emphasize position sizing here. The balance sheet can buy time, but it doesn’t guarantee a favorable outcome.

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What Has to Go Right for a True Turnaround?

For this to evolve from a “wait” into a clear long idea, we think three threads need to move in the right direction and stay there.

1. Sequential gross margin improvement above 45.5%

The first and most important signal will be gross margin. From the December quarter’s 44.4%:

We want to see a clean, sequential improvement above roughly 45.5%.
Management needs to show that tariff mitigation, mix improvements, and reduced promotions are actually offsetting cost pressure.

If the next one to two quarters fail to show progress and management continues to blame promotions and mix alongside tariffs, that’s a sign the reset is not restoring pricing power Under Armour IR PR, Feb 6 2026.

2. North America revenue trends improve from -10%

UGLY prints in North America are already in the numbers. In F3Q26, North America revenue dropped 10% year-over-year to $757 million Under Armour IR PR, Feb 6 2026. FY26 guidance assumes North America down about 8% for the full year.

Our monitoring thresholds:

Within 90 days (next quarter): we want to see a better trend than -10% year-over-year.
Within 180 days (two quarters): if North America still prints around -10% for two straight quarters, we’d treat the stabilization thesis as broken and step aside.

3. Restructuring stops creeping higher

The restructuring plan has already been expanded once, from its original scope to up to $255 million to include the Curry Brand separation Under Armour IR PR, Nov 13 2025. In the December quarter alone, UA booked about $75 million of restructuring and related charges Under Armour IR PR, Feb 6 2026.

We’re watching for:

Quarterly restructuring charges stepping down meaningfully from that $75 million level
Clear reaffirmation that the plan will be “substantially complete” by the end of FY26 with no increase in the cap

If those boxes are checked, the market’s earnings-quality discount should begin to compress.

Will Under Armour Deliver Long-Term Growth?

Looking past the near-term noise, what does a plausible 2–5 year path look like?

The filings and management commentary point to three long-term requirements:

1. North America must grow again – without permanent promotion. The 10-Q explicitly flags a more promotional environment in North America as a gross margin headwind 10-Q (2026), p.35. A healthy future state is North America returning to positive growth while promotions normalize back to a tactical tool, not a crutch.

2. Footwear momentum needs to rebuild. In the most recent quarter, footwear revenue declined 12% year-over-year Under Armour IR PR, Feb 6 2026. In a category dominated by Nike, adidas, Puma, and others, UA cannot afford to be meaningfully weaker in footwear without sacrificing mix, relevance, and long-term gross margin.

3. Control and reporting credibility must be restored. The auditor concluded UA did not maintain effective internal control over financial reporting as of March 31, 2025 due to a material weakness in balance sheet reconciliation controls 10-K (2025), p.38. Management is working on remediation, but until it is fully resolved, the market will continue to apply some governance discount.

If those elements fall into place and tariff mitigation actions begin to show up in the P&L post-FY26 as management has suggested Investopedia, Aug 2025, the long-term picture could look much healthier than today’s prints imply. But the burden of proof sits squarely with management.

Market Sentiment, Narrative Shifts, and Insider Activity

How the Street is framing the story

Media coverage and consensus commentary currently cast Under Armour as a turnaround that’s “past the worst” but still grappling with structural headwinds:

Early 2026 coverage highlights better-than-feared results and modest outlook lifts, even as tariff pressures and turnaround costs linger The Wall Street Journal, Feb 2026 MarketWatch, Feb 2026.
Late summer 2025 headlines emphasized weak sales outlooks and outlook shocks, with some investor frustration over how much of the blame was placed on tariffs Bloomberg, Aug 2025 Barron’s, Aug 2025.

We’d characterize sentiment as:

Not loved, not abandoned. The stock is still widely followed, but opinion is split between “early traction” believers and “structural drag” skeptics.
Margins under a microscope. Tariffs are now seen as a quantified headwind rather than a surprise, but cost creep in the turnaround plan keeps the story messy MarketWatch, Feb 2026.

The market is implicitly assuming that:

Tariff headwinds become more manageable over the next 12–18 months.
North America demand stabilizes over 12–24 months, with fewer sharp downside surprises.
Restructuring costs stop stepping higher.
Leadership transitions, including the new CFO appointment effective February 2026, don’t derail execution Under Armour IR PR, Nov 6 2025.

We don’t think those assumptions are heroic, but they are also not trivial.

Unusual insider buying by a 10% owner

One of the more interesting datapoints in our research is the pattern of insider activity, particularly by a major shareholder:

A 10% owner, WATSA V PREM ET AL (indirect), executed a large series of open-market purchases across late December 2025 and January 2026.
On December 30, 2025 alone, they bought 11,504,478 Class A shares at $5.1408 per share.
Additional sizable purchases followed in mid- and late January 2026 across both Class A and Class C shares, at prices between about $5.60 and $5.90.
Activity continued on January 27 and 28, 2026 with hundreds of thousands of shares acquired on each day.

These are not token buys; they are large, tightly clustered accumulations around the $5–$6 range. While insider buying is never a guarantee of future performance, it does suggest a key long-term holder sees value at levels not far below today’s trading price.

We’d still want to dig further into Schedule 13D/13G filings and Form 4 footnotes to understand the buyer’s strategy and time horizon, but the signal is notable.

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Key Risks, Red Flags, and What We’re Monitoring

Even with liquidity comfort, there are meaningful risks that could push the stock lower or keep it range-bound.

Tariffs plus promotions: the toxic combo

Tariffs alone are painful but manageable with time and mitigation. Tariffs plus structural promotions in North America are far more dangerous. If UA ends up in a steady state where:

Higher tariffs raise product costs, and
Promotions become permanent to sustain volume

then gross margin could be re-based lower for years, limiting reinvestment and earnings power. We see this as the core failure mode.

Restructuring and “cost creep”

The turnaround plan is getting more expensive just as results are improving. Media coverage has already zeroed in on this “cost creep” theme MarketWatch, Feb 2026. Any sign that:

The restructuring cap of $255 million is raised again, or
The timeline extends beyond FY26

would reinforce the perception that UA’s reset is open-ended and perpetually dilutive to earnings.

Earnings quality and accounting noise

The December-quarter filings include:

Elevated litigation reserve expense in SG&A and corporate other, including $98.5 million of litigation reserve expense in the comparative period and a prior $261 million securities action reserve 10-Q (2026), p.35, p.40
A $247 million valuation allowance on U.S. federal deferred tax assets driven by cumulative U.S. GAAP losses over three years, largely from restructuring and litigation 8-K (2026)

Until these non-operating items fade, GAAP earnings will remain a noisy measure of underlying performance. That noise supports a discount relative to peers with cleaner P&Ls.

Liquidity-preservation moves as a red flag

Finally, the 10-Q acknowledges that in a more stressed scenario UA could:

Reduce expenditures or marketing
Cut back on capital expenditures
Use alternative liquidity sources such as sale-leaseback transactions

If we see these moves implemented in a material way, we’d take that as a sign the reset is no longer self-funding and that management is on defense rather than offense.

How We’d Approach UA as Investors

Bringing it all together, here’s how we’d frame Under Armour for a fundamental investor in 2026:

Rating: WAIT, with modest conviction. The story is finely balanced between stabilization and structural margin reset.
Time horizon: The next 6–9 months are critical. By late summer 2026, we should have enough data on margins, North America, and restructuring to know if the thesis is working.
Position sizing: Keep it small to moderate until we see confirming signals. This is not the kind of name we’d make a core holding at this stage.
Entry/exit bands: More interested to add below roughly $5.75; more inclined to trim or avoid above roughly $8.25.

Most importantly, we’d anchor our decisions on observable checkpoints, not narrative alone:

Gross margin trend vs. 44.4% starting point
North America revenue trend vs. -10% and FY26 guidance of -8%
Restructuring charges trend vs. the $75 million recent quarter
Any sign of liquidity-preserving moves or restructuring cap changes

If you build a watchlist of similar “reset” names, this kind of structured, checkpoint-driven process can stop you from either bailing out too early on a real turnaround or riding a broken story down.

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Under Armour (UA) Deep Research Report: Margin Squeeze, Turnaround Hopes, and Insider Buying in 2026