Q2 Preview: Investors Hope to Be 'Witness' To Another Strong Nike (NKE) Quarter
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Nike, Inc. (NYSE: NKE) is higher today ahead of the company's second quarter earnings report, expected out after the market closes today. Shares are up 0.7% in early trading.
The company is expected to report an EPS of $0.88 with revs of $4.81 billion. Last quarter, the Beaverton, OR-based retailer posted an EPS of $1.14 on revs of $5.18 billion, mixed to the consensus EPS of $1.01 and revs of $5.22 billion. For Q210, NKE produced an EPS of $0.76 paired with revenues of $4.4 billion, compared to the consensus EPS $0.76 and revs of $4.4 billion.
Shares gained 20% through the quarter to $85.83. Nike is up about 5% since then, and 40% for 2010.
A simple valuation puts NKE at a forward P/E of 20.4x FY11 EPS estimates and 18.1x FY12 EPS estimates.
Data from Bloomberg has 14 analysts with a Buy on NKE, 6 with a hold, and none suggest to Sell. The analyst price target average is $96, with a high of $100 and low of $100. Shares have a 52-week range of $60.89 - $90.87 (with the 52-week high being reached yesterday). Additionally, $90.87 looks to be a new all-time high for the stock.
Summary
Goldman Sachs is looking for an EPS of $0.91, ahead of the Street's estimate. Goldman is taking a page from last quarter, when orders strengthened toward the second half of the quarter. They assume that strength will carry through into this quarter. Goldman is expecting a strong reaction on the earnings, given that the second quarter is historically strong and they expect several themes highlighted in the quarter that will stand out as positives for investors.
On the first point, Goldman notes that, "of the past ten years, NKE beat 2Q eight times by an avg of 7%, and the stock has reacted positively 90% of the time by an avg of 4%."
On the second point, Goldman points out key items being, "(a) global growth: NKE generates more 50% of its sales outside of the US; (b) strong US product cycle: Footwear has been a standout category at retail and data within the athletic segment suggesting that for the first time in well over a year BOTH the key running and basketball segments are seeing strong growth; (c) better execution against big dollar opportunities like apparel: NKE’s new focus on style productivity is compelling as similar “Apparel 101” process changes have been a major win for other brands."
The firms carries a Buy rating, with a six-month price target of $97.
Capstone Investments is looking for an EPS of $0.89 with revs of $4.8 billion. Capstone recently upped their EPS estimate based on strength in their Glide and Free footwear segments. On revs, their estimate includes an 8% increase in North American sales and 4% boost in Western Europe sales.
Gross margins are expected to increase, if ever so slightly, on "rising input costs, freight and labor expenses offset by efficiencies from tight inventory control and the supply chain."
Capstone has a Hold on the shares and no price target.
Notably, Nike future orders increased 10% last quarter (13% ex FX), which was the largest increase in over ten years.
Nike, Inc. is expected to release their Q211 earnings on Tuesday, December 21, 2010, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
The company is expected to report an EPS of $0.88 with revs of $4.81 billion. Last quarter, the Beaverton, OR-based retailer posted an EPS of $1.14 on revs of $5.18 billion, mixed to the consensus EPS of $1.01 and revs of $5.22 billion. For Q210, NKE produced an EPS of $0.76 paired with revenues of $4.4 billion, compared to the consensus EPS $0.76 and revs of $4.4 billion.
Shares gained 20% through the quarter to $85.83. Nike is up about 5% since then, and 40% for 2010.
A simple valuation puts NKE at a forward P/E of 20.4x FY11 EPS estimates and 18.1x FY12 EPS estimates.
Data from Bloomberg has 14 analysts with a Buy on NKE, 6 with a hold, and none suggest to Sell. The analyst price target average is $96, with a high of $100 and low of $100. Shares have a 52-week range of $60.89 - $90.87 (with the 52-week high being reached yesterday). Additionally, $90.87 looks to be a new all-time high for the stock.
Summary
Goldman Sachs is looking for an EPS of $0.91, ahead of the Street's estimate. Goldman is taking a page from last quarter, when orders strengthened toward the second half of the quarter. They assume that strength will carry through into this quarter. Goldman is expecting a strong reaction on the earnings, given that the second quarter is historically strong and they expect several themes highlighted in the quarter that will stand out as positives for investors.
On the first point, Goldman notes that, "of the past ten years, NKE beat 2Q eight times by an avg of 7%, and the stock has reacted positively 90% of the time by an avg of 4%."
On the second point, Goldman points out key items being, "(a) global growth: NKE generates more 50% of its sales outside of the US; (b) strong US product cycle: Footwear has been a standout category at retail and data within the athletic segment suggesting that for the first time in well over a year BOTH the key running and basketball segments are seeing strong growth; (c) better execution against big dollar opportunities like apparel: NKE’s new focus on style productivity is compelling as similar “Apparel 101” process changes have been a major win for other brands."
The firms carries a Buy rating, with a six-month price target of $97.
Capstone Investments is looking for an EPS of $0.89 with revs of $4.8 billion. Capstone recently upped their EPS estimate based on strength in their Glide and Free footwear segments. On revs, their estimate includes an 8% increase in North American sales and 4% boost in Western Europe sales.
Gross margins are expected to increase, if ever so slightly, on "rising input costs, freight and labor expenses offset by efficiencies from tight inventory control and the supply chain."
Capstone has a Hold on the shares and no price target.
Notably, Nike future orders increased 10% last quarter (13% ex FX), which was the largest increase in over ten years.
Nike, Inc. is expected to release their Q211 earnings on Tuesday, December 21, 2010, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
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