Companies and Brands

What to Look for in Nike Earnings

Chris Lange

Published: March 22, 2016 9:15 am

Last Updated: January 13, 2020 11:40 am

Nike Inc. (NYSE: NKE) is scheduled to release its fiscal third-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.49 in earnings per share (EPS) on $8.20 billion in revenue. In the same period of last year, the company posted EPS of $0.45 and $7.46 billion in revenue.

This company is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly owned subsidiaries include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. Given Nike is one of the most recognizable brands in the world, long-term investors may do very well adding shares here, despite the big move up in the stock this year.

Nike benefits from consumer preferences for “athleisure.” With the company’s extensive product line and recognizable worldwide branding, the stock continues to roll year after year. Driven by its digital business as well as inline and factory stores, the company now anticipates achieving $16 billion in revenue by the end of fiscal year 2020. Over the next five years, incremental growth in its Brand Direct to Consumer revenues is expected to be driven by e-commerce sales, which are projected to grow to $7 billion. Nike also expects to drive wholesale growth in the mid-to-high single-digit range over the next five years.

A few analysts weighed in on the company recently:

• Deutsche Bank reiterated a Buy rating with a $75 price target.
• Jefferies reiterated a Buy rating with a $76 price target.
• Piper Jaffray reiterated an Overweight rating with a $70 price target.
• JPMorgan reiterated an Overweight rating with a $72 price target.
• B. Riley reiterated a Buy rating with a $73.50 price target.
• Sterne Agee CRT reiterated a Buy rating and a $75 price target.
• Goldman Sachs has a Buy rating with a $74 price target.

So far in 2016, Nike barely has outperformed the broad markets, with the stock up nearly 4%. Over the past 52 weeks, the stock is up 28%.

Shares of Nike closed Monday down 2.8% at $64.72, with a consensus analyst price target of $71.24 and a 52-week trading range of $47.25 to $68.19. In early trading indications Tuesday, the stock was up 0.6% at $65.10.