Contrasting Adidas (OTCMKTS:ADDYY) and Under Armour (NYSE:UAA)

Adidas (OTCMKTS:ADDYY) and Under Armour (NYSE:UAA) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Adidas and Under Armour”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adidas	$28.06 billion	1.02	$1.52 billion	$4.54	17.61
Under Armour	$4.97 billion	0.41	-$495.64 million	($1.15)	-4.09

Adidas has higher revenue and earnings than Under Armour. Under Armour is trading at a lower price-to-earnings ratio than Adidas, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Adidas and Under Armour’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adidas	5.30%	22.35%	6.80%
Under Armour	-9.99%	4.04%	1.37%

Institutional & Insider Ownership

34.6% of Under Armour shares are held by institutional investors. 15.7% of Under Armour shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Adidas has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Under Armour has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Adidas and Under Armour, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adidas	1	4	10	1	2.69
Under Armour	4	10	1	1	1.94

Adidas presently has a consensus target price of $146.00, suggesting a potential upside of 82.59%. Under Armour has a consensus target price of $5.77, suggesting a potential upside of 22.65%. Given Adidas’ stronger consensus rating and higher probable upside, analysts clearly believe Adidas is more favorable than Under Armour.

Summary

Adidas beats Under Armour on 11 of the 14 factors compared between the two stocks.

About Adidas

adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia-Pacific, and Latin America. It offers footwear, apparel, and accessories and gear, such as bags and balls under the adidas brand; golf footwear and apparel under the adidas Golf brand; and outdoor footwear under the Five Ten brand. It sells its products through its own retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.

About Under Armour

Under Armour, Inc., together with its subsidiaries, engages developing, marketing, and distributing performance apparel, footwear, and accessories for men, women, and youth. The company provides its apparel in compression, fitted, and loose fit types. It also offers footwear products for running, training, basketball, cleated sports, recovery, and outdoor applications. In addition, the company provides accessories, which include gloves, bags, headwear, and socks; and engages in brand licensing, digital subscription, advertising, and other digital business activities. It primarily offers its products under the UNDER ARMOUR, ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, ARMOUR FLEECE, and ARMOUR BRA brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour retail stores, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through Brand and Factory House stores, as well as through e-commerce websites. It operates in the United States, Canada, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. The company was incorporated in 1996 and is headquartered in Baltimore, Maryland.