Under Armour's Restructuring and Fairfax's Share Purchases: A Strategic Buying Opportunity?

In the ever-evolving landscape of value investing, identifying undervalued opportunities often requires a nuanced understanding of a company's capital structure, operational resilience, and strategic direction. Under Armour (UA), the once-dominant name in athletic wear, has been navigating a complex restructuring effort since 2024, while recent institutional purchases by Fairfax Financial Holdings have reignited debates about its investment potential. This analysis explores whether Under Armour's current trajectory-marked by aggressive cost-cutting, debt management, and a renewed focus on profitability-presents a compelling case for value investors.

Restructuring: A Double-Edged Sword for Capital Structure

Under Armour's fiscal 2025 restructuring plan has expanded significantly, with total estimated charges now reaching $255 million-a 59% increase from its initial $160 million projection according to the company's announcement. Of this, $107 million is cash-related, including $34 million for severance and $73 million for transformational initiatives, while $148 million is non-cash, primarily tied to asset impairments as reported. As of September 2025, the company had already incurred $147 million in charges, with $82 million in cash outflows according to financial statements. These measures, while costly, are expected to yield long-term benefits. For fiscal 2026, Under Armour has raised its adjusted operating income outlook to $95 million–$110 million, a stark contrast to its $185 million operating loss in fiscal 2025 as detailed in the financial report.

The restructuring has also reshaped Under Armour's capital structure. The company has repurchased $115 million in shares under a $500 million buyback program by September 2025, signaling confidence in its intrinsic value according to company press release. Simultaneously, it has taken steps to optimize debt: in Q1 2026, it raised $400 million in senior notes to retire $600 million in higher-cost debt maturing in June 2026 as reported. As of June 2025, Under Armour held $911 million in cash and equivalents, underscoring its commitment to liquidity according to financial disclosures. However, its debt-to-equity ratio has risen to 1.02 as of December 2025, up from a 12-month average of 0.42 as per financial data. While this suggests increased leverage, the company's interest coverage ratio of 5.5x indicates it can comfortably service its debt according to financial analysis.

Fairfax's Bold Bet: A Vote of Confidence?

Fairfax Financial Holdings, a long-time value investor, has amplified its stake in Under Armour through a series of purchases between December 22 and 29, 2025. The firm acquired 15.68 million shares (Class A and C) for $70.9 million, averaging $4.53 per share-near Under Armour's 52-week low according to insider trading data. Post-purchase, Fairfax now owns 16.1% of the company, including 30.45 million Class A shares and 7.78 million Class C shares as reported. This move, occurring amid Under Armour's Q4 2025 revenue decline and S&P Global's negative CreditWatch rating according to financial analysis, signals a contrarian view.

Fairfax's timing is strategic. Under Armour's shares trade at a price-to-sales ratio of 0.4x, well below the U.S. luxury industry average of 0.7x as per valuation data, and its intrinsic value is estimated at $6.46 per share, compared to its current price of $5.14 according to investment analysis. Analysts argue that Fairfax's purchase validates the company's undervaluation, particularly as it executes cost-cutting measures and focuses on international growth.

Value Investing Lens: Risks and Rewards

From a value investing perspective, Under Armour's financials present a mixed picture. On the positive side:
- Cost discipline: SG&A expenses are projected to decline by 40% in Q1 2026 compared to the prior year as reported.
- Margin expansion: Gross margin improved by 180 basis points in fiscal 2025 to 47.9%, driven by supply chain efficiencies and reduced discounting according to financial results.
- Shareholder returns: The $500 million buyback program has retired 12.8 million shares by March 2025 as detailed in the financial report.

However, risks persist:
- Revenue declines: North American sales fell 11% in Q4 2025, with international revenue down 13% according to financial results.
- Debt concerns: A debt-to-equity ratio of 1.02 and total debt of $1.19 billion as of June 2025 as reported raise questions about long-term leverage.
- Profitability challenges: Despite a $198 million adjusted operating income in fiscal 2025, the company reported a $201 million net loss according to financial statements.

Strategic Buying Opportunity?

The case for Under Armour hinges on its ability to execute its restructuring and capitalize on its undervalued equity. The separation of the Curry Brand, expected to have minimal financial impact as stated in the restructuring plan, and Kevin Plank's return as CEO could catalyze a turnaround. Meanwhile, Fairfax's purchases suggest that institutional investors see upside in a company trading at a discount to its intrinsic value.

Yet, investors must weigh these opportunities against structural challenges. The sportswear market remains highly competitive, with Nike and Adidas dominating market share. Under Armour's focus on international expansion-particularly in EMEA and Asia-Pacific-could mitigate North American declines, but execution risks are significant.

Conclusion

Under Armour's restructuring and Fairfax's share purchases collectively paint a cautiously optimistic picture for value investors. While the company's debt levels and revenue trends remain concerning, its disciplined capital management, margin improvements, and strategic repositioning offer a path to value creation. For those with a long-term horizon and a tolerance for risk, Under Armour's current valuation may represent a compelling entry point-provided the restructuring delivers on its promises.