The NBA Finals is "the most public venue yet of the intensifying battle" between Nike and Under Armour, a competition that has "been brewing for some time and is getting more high profile as Under Armour grows the resources to compete," according to Matt Krantz of USA TODAY. Nike sponsors Cavaliers F LeBron James, while UA sponsors Warriors G Stephen Curry, but for investors, the winner of the Finals or "even who wins the super-sponsorships isn't what's most important." It is "where they can get the best score for themselves." Krantz notes Under Armour beats out Nike in "growth rate," as UA "chalked up a 29% revenue gain." Now, analysts "think it will grow another 25% this year." That makes Nike "look like it's standing still with 8.3% expected revenue growth" in '16. However, Nike beats out Under Armour in terms of "stability and durability." UA is "still tiny compared to Nike." If revenue "does hit" $5B this year at UA, that "will still be just 15%" of the $33.9B revenue expected to be put up by Nike. Nike's adjusted earnings per share is "expected to jump 8.7% this year, not far behind the 11.3% bottom line growth expected at Under Armour." Macquarie Senior Equity Research Analyst Laurent Vasilescu said that Nike generated $2.1B in "free cash flow the past 12 months, while Under Armour burned through" $370.8M (USA TODAY, 6/7). BB&T Senior Equity Research Analyst Corinna Freedman said “product appeal" has proven to drive sales more than on-court action, so the "lineup this year in the Finals is a non-event.” However, Freedman said. “We do think that the global growth story for Nike continues. We love the valuation here compared to Under Armour” ("Power Lunch," CNBC, 6/6).
MISSED OPPORTUNITY: Curry yesterday announced he will not play in the Rio Games, and KNBR-AM’s Rod Brooks said he is "pretty sure Under Armour would love it if Steph would decide to go, because they’re locked in this serious battle with Nike to try to take some of their marketshare." Brooks said, "This would be the year Steph would go to the Olympics, where he would become a global phenomenon along with Messi. That would be big for Under Armour and for Steph's brand.” CSN Bay Area contributor Phil Taylor: “Lost opportunity” (“Sports Talk Live,” CSN Bay Area, 6/6).
