After Under Armour Stock Surged 50% in 2014, Are Shares Still a Buy?

Under Armour's shares have soared 50% so far in 2014, as the company continues to deliver quarter-after-quarter of expectation-crushing sales growth. But has Under Armour's share price come too far, too fast? Well, we're not short-term market timers here at The Fool, so while Under Armour's stock can certainly pull back sharply in the days, weeks, and months ahead, Fools are more focused on where this business can be 5-10 years down the road. And on that scale, Under Armour's future looks very bright indeed.

What's happened so far in 2014?
Under Armour started its 2014 fiscal year on the right foot, with first-quarter revenue surging 36% year-over-year to $642 million. Gross margin improved to 46.9% from 45.9% in Q1 2013, and operating margin rose to 4.2% compared to 2.9% in the prior year period. Management also raised its 2014 full-year revenue guidance to +24% to +25%, and then more than delivered on that promise in the second quarter.

Second-quarter revenue growth surged 34% to $610 million, making it the 17th consecutive quarter of at least 20% sales growth. That's more than 4 straight years of revenues up 20-plus percent, which is exactly the type of strong and steady growth that can deliver market-crushing returns to long-term investors -- something that UA has definitely delivered.

Helping to fuel that growth are five major catalysts: footwear, women's, direct-to-consumer, international, and connected fitness. Footwear sales leapt 34%, led by the successful launch of new running shoes. Under Armour's direct-to-consumer revenue -- an important, high-margin segment, particularly as e-commerce becomes a larger proportion of global retail sales -- grew 38% year-over-year and accounted for more than 30% of UA's total revenue for the second quarter. And maybe most excitingly, international revenue, which represented only 8% of total revenue in the second quarter and remains a multi-decade growth opportunity, grew 80% year over year.

Under Armour doesn't break out the revenue from its "Women's" segment, but CEO Kevin Plank mentioned on the conference call that it's already a $500 million business that's been consistently growing at a rate north of 20%. Plank also stated that he believes Under Amour's Women's business can be as big if not bigger than its Men's segment. Towards that goal, Under Armour has launched a new campaign featuring ballerina Misty Copeland to help reach "both the consumer who sees herself as a female athlete and the one who describes herself as an athletic female."

Another area of future growth for Under Amour is in what the company calls "Connected Fitness." This segment is spearheaded by UA's recent acquisition MapMyFitness, a fitness technology company with popular mobile apps such as MapMyRun and MapMyRide, which allow users to map, record, and share their workouts. At the time the acquisition was announced, MapMyFitness was already one of the world's largest digital fitness communities, reaching over 20 million registered users and integrating with more than 400 fitness tracking devices. Plank has since stated that the company expects to sign up more than 10 million new users in 2014 and finish the year with over 30 million users. I believe proactive health and wearable technology will be a major trend in the years to come, as governments, corporations, and individuals all seek to prevent injuries and disease and lower healthcare costs, and Under Armour's connected fitness platform positions the company well in this area.

Is Under Amour still a buy?
Under Armour is a business firing on all cylinders. The hard-charging company has a massive opportunity in international markets, long runways for growth in key segments like footwear, women's apparel, and direct-to-consumer, and a promising early stage business in connected fitness. Steady, high sales growth should continue for many years, given the company's low penetration in the enormous global sports apparel market. All told, Under Armour — led by its tenacious founder, chairman, and CEO, Kevin Plank — continues to stay true to its brand by "bringing performance innovation to the consumer and maintaining a premium position wherever we do business." As long as that remains the case, this Tier 1 enterprise should continue to deliver long-term market outperformance for patient investors.