Q1 Preview: Nike (NKE) Looks to Continue the EPS "Beat Streak" with Lean Inventory, FX Hedging
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Shares of Nike, Inc. (NYSE: NKE) are trading higher ahead of the company's first quarter earnings results, expected out after the market closes today, September 23, 2010. Shares are 0.58% to $77.76 in mid-afternoon trading.
The company is expected to report an EPS of $1.01 on revs of $5.22 billion. For the last quarter, the company reported an EPS of $1.06 on revs of $5.08 billion, compared to the consensus EPS of $1.05 and $5.14 billion in revs. Last year, for Q110, Nike had an EPS of $1.07 and revs of $4.8 billion. As per Q410, EPS won and revs lost to the Street consensus for the quarter. Actually, going back to Q208, Nike has at least beat EPS estimates.
Shares of the company dipped ever so slightly through the quarter, about 1.3% to $69.74 at the end of August. Shares are actually up 19.6% from the start of 2010, and have gained about 10.8% since the start of September, keeping pace with the broader markets.
Data from Bloomberg has 14 analysts with a Buy rating on the shares, 7 with a Hold, and none suggesting to Sell. The analyst price target average is $83.82, with a high of $95 and a low of $72.
Technically Speaking
Shares have been trending up since the onset of September, which shouldn't really be a surprise to no one, unless they've been swimming in their huge vault of gold coins, Scrooge McDuck-style. Shares reached a new 52-week high, $79.04, just a few days ago. Looking at a one-year chart, a medium support level may have formed at about the $67.50 level, which is just above where a prior $65.00 resistance level was at the end of 2009 going into 2010. Nike also appears to have broken through an inverted head and shoulder pattern at the $75.00 price level, looking at the last 4-months, though volumes are a little lower than usual.
Summary
Goldman Sachs is expecting strong Q111 results. GS has a Buy rating with a six-month price target of $85.00. They see a strong Q1 on accelerating sales trends, still-strong gross margin, and strong futures growth. They note that Q410 set a low-bar coming into this quarter. Foreign exchange-neutral futures orders accelerated to 10% last quarter, compared to 6% the prior quarter, leading GS to believe in accelerating sales trends. Inventories are down 13%, and GS notes that NKE last guided when the euro was near all-time lows. Hedges should help the company. GS is looking for an EPS of $1.10. The growth profile and volatility profile for Nike are below their peer group, but Nike beats peers in returns on capital and trading multiple.
Capstone Investments, with a Hold rating on the shares, thinks that Nike will post an EPS of $1.11 with revs of $5.26 billion. They see double-digit growth in Central & Eastern Europe, China, and emerging markets. Rising input costs and freight and labor expenses are expected to pressure profitability, with EBIT margins narrowing from 14.2% to $13.8% this year.
Nike, Inc. is expected to release their Q111 earnings on Thursday, September 23, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
The company is expected to report an EPS of $1.01 on revs of $5.22 billion. For the last quarter, the company reported an EPS of $1.06 on revs of $5.08 billion, compared to the consensus EPS of $1.05 and $5.14 billion in revs. Last year, for Q110, Nike had an EPS of $1.07 and revs of $4.8 billion. As per Q410, EPS won and revs lost to the Street consensus for the quarter. Actually, going back to Q208, Nike has at least beat EPS estimates.
Shares of the company dipped ever so slightly through the quarter, about 1.3% to $69.74 at the end of August. Shares are actually up 19.6% from the start of 2010, and have gained about 10.8% since the start of September, keeping pace with the broader markets.
Data from Bloomberg has 14 analysts with a Buy rating on the shares, 7 with a Hold, and none suggesting to Sell. The analyst price target average is $83.82, with a high of $95 and a low of $72.
Technically Speaking
Shares have been trending up since the onset of September, which shouldn't really be a surprise to no one, unless they've been swimming in their huge vault of gold coins, Scrooge McDuck-style. Shares reached a new 52-week high, $79.04, just a few days ago. Looking at a one-year chart, a medium support level may have formed at about the $67.50 level, which is just above where a prior $65.00 resistance level was at the end of 2009 going into 2010. Nike also appears to have broken through an inverted head and shoulder pattern at the $75.00 price level, looking at the last 4-months, though volumes are a little lower than usual.
Summary
Goldman Sachs is expecting strong Q111 results. GS has a Buy rating with a six-month price target of $85.00. They see a strong Q1 on accelerating sales trends, still-strong gross margin, and strong futures growth. They note that Q410 set a low-bar coming into this quarter. Foreign exchange-neutral futures orders accelerated to 10% last quarter, compared to 6% the prior quarter, leading GS to believe in accelerating sales trends. Inventories are down 13%, and GS notes that NKE last guided when the euro was near all-time lows. Hedges should help the company. GS is looking for an EPS of $1.10. The growth profile and volatility profile for Nike are below their peer group, but Nike beats peers in returns on capital and trading multiple.
Capstone Investments, with a Hold rating on the shares, thinks that Nike will post an EPS of $1.11 with revs of $5.26 billion. They see double-digit growth in Central & Eastern Europe, China, and emerging markets. Rising input costs and freight and labor expenses are expected to pressure profitability, with EBIT margins narrowing from 14.2% to $13.8% this year.
Nike, Inc. is expected to release their Q111 earnings on Thursday, September 23, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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