As of January 10, 2026, the performance athletic apparel sector is caught in a high-stakes transition. For Under Armour, Inc. (NYSE: UA), the narrative has shifted from the explosive growth of the mid-2010s to a gritty, high-stakes restructuring phase. With the stock currently hovering around $5.20 to $5.65 (depending on the share class), the market is essentially pricing in a “survival of the fittest” scenario. For UA (Class C) and UAA (Class A) shareholders, the central question is no longer just about valuation multiples, but about the structural integrity of the brand’s turnaround under the second-act leadership of founder Kevin Plank.
Financial Architecture: Navigating the Deficit and Restructuring Costs
To assess Under Armour’s current valuation, one must delve into the complexities of its fiscal 2026 balance sheet. The company recently reported its second-quarter fiscal 2026 results (ended September 30, 2025), which revealed a revenue decline of 5% to $1.3 billion. While this was slightly better than the ultra-cautious forecasts provided earlier in the year, it underscores a persistent top-line contraction that has plagued the brand for nearly eight consecutive quarters.
The company’s profitability has been heavily impacted by the Fiscal 2025 Restructuring Plan, which was recently expanded to include a total of $255 million in pre-tax charges. Of this, nearly $147 million has already been incurred. These charges are a double-edged sword: while they weigh heavily on current earnings—leading to a GAAP operating loss forecast of $56 million to $71 million for the full year 2026—they are intended to streamline a bloated corporate structure. Adjusted operating income, which strips away these one-time transformation costs, is expected to reach $95 million to $110 million, suggesting that the “core” business remains marginally profitable despite the macro headwinds.
Gross margins have also been a point of vulnerability. In the most recent quarter, margins contracted by 250 basis points to 47.3%. Much of this decline was attributed to nearly 275 basis points of supply chain headwinds, primarily driven by increased U.S. tariffs and unfavorable channel mix. For 2026, the company expects a full-year gross margin decline of 190 to 210 basis points, a significant hurdle for any valuation model that relies on historical profitability levels.
Strategic Pivot: The Return of Kevin Plank and Brand Identity
The business development strategy in 2026 is defined by a “back-to-basics” philosophy. Kevin Plank’s return as CEO in 2024 signaled an end to the “premium lifestyle” experimentation of previous regimes and a renewed focus on the core “performance” athlete. The brand’s current roadmap centers on sharpening its storytelling and re-establishing its belief as a “high-performance” tool rather than a casual leisure brand.
A critical, and perhaps surprising, move in the 2026 business plan is the separation of the Curry Brand. By spinning off Stephen Curry’s signature line into a more autonomous unit within the portfolio, Under Armour aims to maximize the individual value of its most significant sub-brand, similar to the Jordan Brand’s relationship with Nike. The company estimates that its global basketball business, anchored by Curry, will contribute $100 million to $120 million in revenue for fiscal 2026. This separation is intended to allow for more agile marketing and product development, tailored specifically to the basketball consumer without the baggage of the broader corporate restructuring.
Product Innovation and Market Expansion: The EMEA Bright Spot
While the North American market remains the most significant drag—with revenue declines in the high-single digits—Under Armour has found a formidable growth engine in the EMEA (Europe, Middle East, and Africa) region. In 2026, the company expects high-single-digit growth in EMEA, driven by successful market entry into emerging football (soccer) markets and a robust distribution network in Central Europe.
Innovation in 2026 is focused on the “AIEV” (Artificial Intelligence Enhanced Vesture) and high-performance footwear. The brand’s footwear revenue, which saw a 16% decline in the most recent quarter, is the primary target for a 2026 rebound. The launch of the Flow Velociti Elite 3 and new developments in the Project Rock training line are aimed at reclaiming shelf space in specialty running and training retailers. Furthermore, the company’s recent “Fitness@Sea” initiative—a partnership launching in late January 2026 onboard luxury cruise liners—demonstrates an attempt to find “non-traditional” premium channels to showcase its technical gear.
Important Events and Institutional Confidence
A major “signal” for the 2026 valuation occurred in the first week of January. V. Prem Watsa, a prominent investor and “10% owner,” executed an open-market purchase of over 13.2 million shares (a mix of Class A and Class C) for a total value of approximately $67.4 million. Such a significant insider/major-owner buy in early 2026 suggests that while the public market remains skeptical, “smart money” may see a bottom forming in the mid-$5 range.
Additionally, the company is undergoing a leadership transition in its finance department. Reza Taleghani is set to join as Executive Vice President and Chief Financial Officer in February 2026, replacing David Bergman. This “fresh blood” in the C-suite is often a precursor to more aggressive capital allocation strategies or a more rigorous focus on cost-cutting as the restructuring plan nears its 2026 completion.
Synthesis: Assessing the Valuation Gap
When evaluating Under Armour in 2026, one must weigh its distressed financials against its brand resilience. The stock trades at a significant discount to its historical highs and its peers like Nike or Lululemon. Its market capitalization of approximately $2.3 billion is barely half of its annual revenue, a low multiple for a global brand.
- The Overvaluation Argument: Skeptics point to the persistent revenue decline in North America and the massive gross margin compression due to tariffs. If the brand cannot find a way to grow its volume in its home market, no amount of cost-cutting will justify a premium valuation.
- The Undervaluation Argument: Contrarians look at the $95M – $110M in adjusted operating income and the strong growth in EMEA. They argue that once the $255 million in one-time restructuring costs are cleared off the books in late 2026, the company will emerge as a leaner, more profitable entity with a much cleaner balance sheet.
Ultimately, Under Armour in 2026 is a turnaround story in its most difficult chapter. The 2026 fiscal year will be the ultimate test of whether Kevin Plank’s “performance first” vision can resonate with a new generation of athletes or if the brand is destined to remain a middle-market player in an increasingly bifurcated economy. For the stock to break out of its current $5 range, it will need to show not just that it can cut costs, but that it can once again make the athlete “better.”