Nike Stock Riding a High After Earnings Beat

September 26, 2019
697 Views

Stock in Nike Inc. (NYSE: NKE) was one of the top performers on Wednesday, climbing 4.16% after an expected but still impressive earnings beat.

The shoe and apparel company, which is one of the largest of its kind, reported strong year over year revenue growth and even better income performance on its latest earnings call. Growth has been driven by the continued popularity of the brand, as well as a new sales model that sees the company taking on e-commerce giant Amazon (NASDAQ: AMZN) in the digital space.

Here’s what investors need to know from the latest report.

Strong Earnings and Income Growth Across the Board

Nike CEO Mark Parker said that the latest performance figures were evidence of Nike’s depth and the balance of its “complete offense”. The executive was referring to the company’s numerous digital outreach strategies, such as its marketing campaigns on popular social networks.

Earnings per share were reported at $0.86 for the most recent quarter, beating the analyst consensus estimate by $0.16. Total sales revenue for the period came in at $10.66 billion, around $240 million higher than what analysts expected.

Overall, revenue increased 7% year over year, while net income increased by an impressive 25%. The company’s gross profit margin for the period was 45.7%, an incredible figure considering the expense in development and marketing that exists in the apparel industry.

Converse, a popular brand acquired by Nike in 2003, saw 8% in total revenue growth.

Investors Reacted with a Major Buying Storm

Stock activity in Nike was intense yesterday. As predicted earlier this week, the positive earnings call led to a boost in stock price. Nike was up 4.16% at the close of trading on Wednesday, finishing at $90.81. This is close to the 52-week high of $92.79, and there could be more upside in the stock for the rest of this week.

Analysts are optimistic with their target prices, with an average of $101.27 recorded by FactSet Research Systems.

Nike Is Still an Opportunity to Buy?

Investors interested in Nike’s recent growth may have concerns about buying right after a dramatic stock price increase. However, major investment firms still have confidence.

  • Credit Suisse raised its price target on Wednesday to $105, citing confidence in Nike’s momentum and revenue performance.
  • Stifel, another major investment bank, is also confident. It maintains a BUY rating with a new target of $106.

Nike has shown this year that it can compete in the e-commerce market, even against a behemoth like Amazon. Customers are still willing to deal directly with the brands that appeal to them, and Nike’s presence is arguably the strongest in the apparel market.

This remains a promising stock for new investors or existing shareholders wanting to expand their positions.

You may be interested

Job Hiring is Picking Up as Employers and Consumers Gain Confidence
Economy
549 views
Economy
549 views

Job Hiring is Picking Up as Employers and Consumers Gain Confidence

Lamont J - March 29, 2021

The recent government stimulus for small and medium-sized businesses, personal stimulus checks, and declining Coronavirus cases, are all great news…

Fed Could Maintain 0% Interest Rate Until 2024
Economy
489 views
Economy
489 views

Fed Could Maintain 0% Interest Rate Until 2024

Adam R - March 26, 2021

The Federal Reserve is holding its target interest rate in a range of 0.00% - 0.25%, even while the economy…

Supply Constraints Could Slow the Home Market
Economy
555 views
Economy
555 views

Supply Constraints Could Slow the Home Market

Becky H - March 25, 2021

Low inventory has been a constant in the home market for more than a year. The supply of existing and…