How would a Trump election influence the stock market?
by Keith Pinder
Like every four years, the world is waiting for the US presidential elections, bets are made, and speculation is made about the impact that the victory or loss of each of the contenders in the elections would have on the stock market.
As some polls are showing, we could have a second term of Donald Trump, even the impact it will ultimately have on the stock market is unknown.
Fiscally, he has little room to reduce the tax burden on companies, as he already did in his first term, since he already reduced it quite a bit and because the North American debt does not allow much more, so this is not expected to be a great driver of the stock market.
On the other hand, what is expected is that the “trade war” with China will intensify, and those tariffs could be raised, even more. It is true that the Biden Administration has also taken steps in this “trade war” with the Asian power, but at least it has not been as verbally aggressive as Trump was. That said, what Trump may have done is increase tariffs with the rest of the world, increasing the price of imports in the United States. That would lead to a stronger dollar.
Another effect of increasing import tariffs would be an increase in inflation, although not caused by an increase in demand, as has occurred in recent years, which would lead to a continuation of the high interest rate policy by the Federal Reserve which, ultimately, would increase the value of the dollar with respect to other currencies.
Typically, this would not be something taken very well by the stock market.
However, another positive effect for financial markets could be a continuation of the deregulation of different sectors, liberalizing them and increasing trade.
The positive and negative effects could be offset, but what seems unlikely is that, although they could have negative effects on financial markets, the Trump effect could not offset much larger impacts, such as the Artificial Intelligence revolution or other technology changes that can drastically lead the productivity and economic evolution of a country as powerful as the United States. That is why, whether the potential Trump administration has a negative or positive impact, stock markets are expected to continue rising.
We will see what happens with the elections and the impact on the economy and financial markets, there is not much left.
UNDER ARMOUR (NYSE: UAA) FOUNDER RETAKES THE HELM
Story by Casey Dylan at Tip Rank
Under Armour (NYSE: UAA), a leading name in the global sports industry, has experienced substantial strategic challenges. Five CEOs resigned within as many years, while the stock has decreased over 66% in the past three years. Now, with the founder once again taking the helm, the company confronts a challenging future – with expectations for decreased purchases in 2024, and predicting a low double-digit revenue drop in Fiscal year 2025.
The stock trades at a value compared to its industry peers, reflecting the headwinds it faces. With no immediate turnaround in sight, long-term investors might want to hold off and wait for signs that management is having success returning the company to more substantial revenue and earnings growth.
Under Armour’s Recent Financial Results & Outlook
Under Armour recently published financial results for the fourth quarter of Fiscal year 2024. The company reported a 5% decrease in revenue to $1.3 billion, which fell short of expectations by $20 million. In its formal clothing sales, revenue has decreased by 1% to $877 million. However, supply chain benefits like cost optimizations increased the gross margin by 170 basis points to 45.0 percent. Non-GAAP EPS of $0.11 surpassed expectations by $0.03.
By the end of the quarter, the company had $859 million in cash and cash equivalents and no outstanding borrowings from its $1.1 billion revolving credit facility. The company also announced its Board of Directors has authorized the repurchase of $500 million of Under Armour’s outstanding Class C common stock over the next three years.
In addition, Management has issued guidance for Fiscal year 2025, indicating a low double-digit percentage revenue decrease. Operating income is expected to lie between $50 and $70 million, with capital expenditure projections between $200 and $220 million. Adjusted diluted earnings per share are expected to be between $0.18 and $0.21.
What Is the Price Target for UAA Stock?
Analysts following the company have taken a cautious stance on the stock. For example, Oppenheimer’s Brian Nagel, a five-star analyst according to Tipranks ratings, recently downgraded the shares from Outperform to Perform. He noted that Kevin Plank’s return to the helm is a positive change, though it will require time to improve fundamentals.
Under Armour is rated a Hold overall, based on the recommendations and price targets assigned by 19 analysts over the past three months. The average price target for UAA stock is $7.37, representing a potential upside of 10.33% from current levels.
The stock has been trending downward, shedding 24% year-to-date. It is currently at the low end of its 52-week price range of $6.18 – $9.50 and demonstrates ongoing negative price momentum, trading below its 20-day (6.83) and 50-day (6.94) moving averages. The stock is relatively undervalued compared to industry peers, with a P/E ratio of 12.37x vs. the Apparel Manufacturing industry average of 18.73x.