Nike Earnings, Currency, Taxes & Valuation: Just There (NKE)

Retail

Published: June 25, 2008 3:46 pm

Nike Inc. (NYSE: NKE) posted its quarterly and fiscal earnings, with a fiscal gain of 14% in revenues, a 28% EPS gain, and a future orders gain of 11%. For the quarter, Nike posted $0.98 diluted EPS on $5.088 Billion in revenues. First Call estimates were $0.96 EPS on $4.95 Billion in revenues.

To explain the difference in estimates versus actual numbers, Nike said that currency added revenue by 5% for the year and by 7% in the quarter. The company also benefited from much lower tax rates compared to 2007 because of larger overseas revenues where taxes are lower. The company said that currency exchange rates increased its reported future orders by 6% in Europe, 7% in Asia Pacific, and 1% in the Americas.

Nike did note that its global inventories stood at $2.4 billion, up 15% from May 31, 2007. During the quarter, it repurchased a total of 4,447,605 shares for approximately $290 million under its original $3 Billion plan. It has now exhausted some $2.1 Billion of that $3 Billion repurchase plan.

Shares closed flat on the day at $65.97, but shares are down more than 4% at $63.10 in after-hours trading. It seems that with the company seeing most of the gains from the lower tax rates and from the currency rates that Wall Street is saying this one is fairly valued for now.

Jon C. Ogg
June 25, 2008

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