Under Armour Inc (NYSE:UA) offered weak guidance along with Tuesday’s better-than-expected bottom line results. Yes, UA stock plummeted considerably as a result, but perhaps most harrowing is that things could still get uglier from here.

Shares in Under Armour stock gapped down 15% at the opening bell and were on track to put out their worst daily performance in eight years. Whenever a stock takes that kind of tumble, it’s worth considering that the market has overreacted and there’s a bargain to be had.

It’s also worth considering that buying UA stock at a time like this is like trying to catch a falling knife. The way revenue is slowing at Under Armour, the latter conclusion is the wiser one.

Under Armour’s Gilded Earnings

For the most recent quarter, Under Armour earnings came to $128.23 million (29 cents per share of UA stock) up from $100.48 million (23 cents) a year ago. Analysts on average were looking for earnings of 25 cents per share, according to a survey by Thomson Reuters. That’s a comfortable earnings beat.

Revenue rose almost 23% to $1.47 billion from $1.20 billion in the same quarter last year. Wall Street was looking for the top line to hit $1.45 billion.

Under Armour posted another quarter of hot growth, but then, investors don’t pay for earnings past. It’s all about expectations for future earnings, and in that regard, UA stock is in trouble. The top-line growth rate is cooling off. Indeed, the latest quarter’s results showed the slowest revenue growth since 2010.

Another concern is that margins contracted substantially because of promotional activity. Any time a company has to go to that bag of tricks to move merchandise, the market gets rightfully concerned.

Under Armour affirmed its current-year earnings and sales forecast, but beyond that, you have to wonder how far off the projections will prove to be. It doesn’t sound like UA has a good handle on it, either. Here’s CEO Kevin Plank in a press release:

“Over the past twenty years we have established ourselves as a premium global brand with a track record of strong financial results. Looking back over the past nine months, it has never been more evident that we are at a pivotal moment in time, where the investments we are making today will fuel our growth and drive our industry leadership position for years to come.”

What to Do About UA Stock

The real killer was the outlook. UA’s long-term target called for revenue to hit $7.5 billion in 2018. On Tuesday, the company said it wouldn’t achieve that goal.

Momentum stocks like UA are valued by their ability to generate accelerating — or at least very high — revenue growth. The eye-popping growth prompts investor to pay big premiums for future earnings. That’s why these names are so pricey, with high forward price-to-earnings multiples.

Whenever a stock is as richly valued as UA stock, it’s doomed to crash once that growth rate comes into question. With a forward price-to-earnings ratio of more than 40, Under Armour was ripe for a selloff on any stumble.

To be sure, UA earnings reveal a company that’s still growing by enviable amounts. It’s just not what the market was led to expect. The apparel and footwear company has now logged 25 consecutive quarters of top-line gains of at least 20%. But if it’s trending in the wrong direction, you can kiss analysts’ compound annual growth rate forecast of 24% goodbye.

The slowdown in growth is hardly a complete surprise for the market. UA stock has been in a volatile downtrend for much of the year. Shares were off about 6% for the year-to-date even before the disastrous earnings release. They’re down 18% now.

But even after the steep selloff, UA stock looks too pricey given the poor visibility we have into its revenue situation.

Under such circumstances, Under Armour stock looks like more of a knife than a dip.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.