QoD: Nike or Under Armour: Which company's stock has performed better over the past five years?

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May 08, 2019
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Investing, Question of the Day, Stocks

Answer: Nike, by a long shot!

Nike closed the trading day on May 1 at $85.27, up $35.77 on June 1, 2014, for an average annualized return of 19.35%.  Under Armour, on the other hand, closed the trading day on May 1 at $22.82, DOWN from its price of $29.75 five years earlier for an average annualized loss of over 2%.

Here's the chart:

Questions:

  • What factors do you think contribute to the very different market performance of these companies?
  • Which products do you personally prefer?  Would you make an investment decision based on your personal product preference?
  • Do you think publicity, sometimes negative, has impacted the stock prices of these companies? (Think Zion Williamson’s shoe blowout, Nike’s support of Colin Kaepernick.)

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (Fox Business and CNN:

Nike entered the NCAA basketball championships outfitting 59% of the teams with apparel and sneakers, while Under Armour sponsored 25%. Under Armour was overrepresented in the final four, outfitting two of the four teams (Texas Tech and Auburn) but champion Virginia had their contract with Nike.

So much of brand value for these companies is tied up in which athletes/teams they sponsor—which celebrity/sports stars are sporting their company’s logo.  But what happens when a company is in the news for some negative events? Read about why the Zion Williamson blowout did not hurt the Nike brand (Footwear News), what happened after Nike continued to support Colin Kaeperick (ABC news) and why some experts feel Nike is a good long-term investment (Stock News).  Then Tiger Woods wins the Masters!

BTW, traders are also bullish on Under Armour (Forbes) and(Barron’s) suggests Under Armour is focusing on profits.

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Want to try these stock comparisons from home? 

  1. Pull historical stock information from Yahoo Finance for 5 years for each company and drop in Google sheet.
  2. Using the Adj. Close column (which accounts for dividends), index the first day in the series to 100. How? Divide each of the adj. stock prices by that first's day stock price. 
  3. Then arrange three columns with one being date, second being AT&T stock prices indexed to first day in the series and the third for Verizon's indexed stock prices.
  4. Highlight those three fields, and Insert>Chart and voila you have the stock comparison chart you see above. 

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About the Author

Beth Tallman

Beth Tallman entered the working world armed with an M.B.A. in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducting student workshops, and developing finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.