FBR Capital Markets: Nike Continues To Impress, But Likes Under Armour Best

Nike Inc (NYSE: NKE) impressed the Street with its earnings beat on Thursday. However, according to Susan Anderson from FBR Capital Markets, at current valuations Under Armour Inc (NYSE: UA) is a better pick than Nike. She was on CNBC Friday to explain why.

Growing The Market

"They (Nike) definitely continue to impress," Anderson began. "The beat was really driven once again by top line and margins. What they are doing is they just continue to drive innovation, which is driving newness."

Anderson added, "They are also growing the market, and this is allowing them to raise prices and in turn drive the top-line and margins."

Related Link: Under Armour Is Accumulating Quite An Athlete Portfolio

Under Armour Instead

On the stock's current valuation, Anderson said, "We do have a Market Perform rating on Nike. I do think a lot of this is priced into the stock; it's trading about 23 times forward year earnings, which is above its 10-year average, which is about the high-teens.

"So, we actually like Under Armour instead, which is more expensive – trades at 59 times – but you are also getting what we see as at least five years if not more of high 20, low 30 percent top-line growth out of them."

Market Share

Anderson was asked when Under Armour could start eating into Nike's market share. She replied, "Right now, I really think, both Nike and Under Armour can continue to perform very well, the market, the activewear market is growing still mid- to high-single digits, so that helps out.

"And then you have other weaker players struggling, such as Adidas continues to struggle. You also have Puma and Reebok. So, I think, Under Armour can continue to seek share from these weaker players for the time being."

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