**Under protection** (NYSE:** TO**, NYSE:

**), the U.S. sportswear and footwear retailer, posted truly astounding results for its second quarter, ending June 30. This implies that UAA stock could easily rise 86.6% to $ 46.30 over the next year and a half, assuming its free cash flow. Margins (FCF) resist 2022 sales forecasts.**

__UAA__Keep in mind that UAA stock closed at $ 24.81 on Thursday, up 31% from July 19, when it hit a low of $ 18.90. So my price target of $ 46.30 is definitely more than double (+ 145%) from its recent low.

Even with a slightly more conservative assumption, my minimum target is $ 34.24, or 38% from Thursday’s close. This article will explain how I got this estimate for the Under Armor stock.

### Excellent FCF income and margins

On August 2, Under Armor reported that its revenue increased 91% year-over-year (YOY) to $ 1.351 billion for the second quarter. In addition, its gross margin was 49.5% and its adjusted net profit was $ 110 million, representing 8.1% of sales.

But more importantly, his FCF Q2 exploded to $ 233.1 million. This can be seen on the *In search of the alpha* page that shows its quarterly operating cash flow of $ 252.8 million, less $ 19.7 million in capital expenditures. More importantly, that $ 252.8 million from FCF represented 17.25% of its $ 1.351 billion in revenue in the second quarter.

Therefore, if we assume that by 2022 the company will be able to continue to achieve 17.3% FCF margins, we can expect a very high FCF number. For example, *Yahoo! Finance*, who uses **Refinitive** data for analysts’ estimates, has an average forecast of $ 5.65 billion for 2022. That’s even lower than the *In search of the alpha* forecast of $ 2.75 billion for 2022. If we apply a margin of 17.25% over the estimate of $ 5.65 billion for sales in 2022, the FCF will reach $ 975 million in 2022. That’s almost a billion dollars in FCF by next year.

### What the Under Armor stock is worth

We can use this to estimate the value of Under Armor stock by the end of 2022. For example, if we use a return metric of 5% FCF, the SAU can be considered to have a potential value of 19.492 billions of dollars. We derive it by dividing $ 974.6 million by 5%.

This translates into a market capitalization target of $ 19.492 billion. That’s 86.6% from Thursday night’s market cap of $ 10,442, according to *Yahoo! Finance*, which I find is the most accurate site for market caps. In other words, the UAA share is worth 86.6% more than $ 24.81, so its target price is $ 46.30 per share.

The bottom line here is that people are back to shopping now and stepped out of their locking holes. If the bottlenecks start to return, it could hurt spending somewhat. But I still think the consumer is back. They are no longer afraid like last year.

### Use a lower FCF margin to value UAA stocks

Wall Street analysts are not as bullish on UAA stocks as I am. For example, TipRanks.com reports that 14 sell-side analysts who wrote on the stock in the past three months have an average target of $ 29.23. This represents a potential increase of 16% from today’s price. It’s much lower than my target.

Keep in mind that there are quite a few risks with my course objective. For example, assuming the FCF is 15% lower on average by 2022 to a level of 15% of sales instead of 17.25%, the total FCF forecast will be $ 848 million, instead of $ 975 million. Using a 5% FCF return metric that implies a target value of $ 16.95 billion, just 62.2% above today’s price. This lowers the price target to $ 40.24.

### What to do with UAA actions

Also, to be even more conservative, let’s assume that it takes a year and a half for this price to occur (i.e. by the end of 2022). This reduces the annual compound return to 38% per year. The calculations on this are a bit complicated, but here is the formula 🙁 (1.622 ^ (1 / 1.5)) – 1 = 0.38.

Therefore, the one-year target price is $ 34.24 (i.e. 1.38 x $ 24.81). That’s pretty close to the TipRanks price target of $ 29.23.

So, being cautious, using a margin estimate of 15% FCF and a yield measure of 5% FCF, our best guess is that the UAA stock will increase by at least 38% by next year. This is a very good potential return on investment for most investors.

*As of the publication date, Mark R. Hake does not hold any positions in any of the stocks mentioned in this article.* *The opinions expressed in this article are those of the author, submitted to InvestorPlace.com *Publication guidelines*.*

*Mark Hake writes about personal finance on ***mrhake.medium.com*** and run the ***Total Value of Return Guide***that you can consult **here**.*