Q4 Preview: Nike (NKE) Looks for Victory Amid Margin Pressures, Future Orders Key
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Price: $40.76 +1.37%
Rating Summary:
26 Buy, 28 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
26 Buy, 28 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nike Inc. (NYSE: NKE) is looking fit Monday ahead of the company's fourth-quarter earnings report, expected out after the market close.
The Street is pegging EPS at $1.16 and sales at $5.54 billion. If the company can hit these estimates, quarter-over-quarter earnings growth would be 7.4 percent while sales growth would be 9.1 percent. In last year's fourth-quarter, Nike posted EPS of $1.06 on revenue of $5.08 billion.
The stock is down about 4 percent year-to-date.
Nike has a P/E ratio of 17.2x next year's earnings, relatively cheap when compared to 20.9x for the industry.
The Street is mostly positive on Nike into earnings. Bloomberg data has 17 analysts with a Buy rating on the shares, 5 with a Hold, and none suggesting to Sell. The price target average is $95.50, with a low of $82 and high of $100. Nike traded in a range of $66.34 to $92.49 over the last 52-weeks.
Analyst Insight
Goldman Sachs is looking for earnings of $1.21 per share. The firm notes "shares have outperformed the market over almost any extended period of time; but in smaller windows shares tend to perform best when gross profit dollar growth is accelerating or stably robust, and track/underperform the S&P in periods of weak/weakening gross profit growth. With gross margin pressure intensifying, meaningful sales acceleration is a needed offset to drive gross profit dollar growth above last quarter’s mid single digit pace." Moving forward, Goldman expects Nike's sales acceleration as a balanced attack: "capacity constraints for hot styles should ease and data suggests Nike’s US footwear sell-through did pick-up considerably this quarter, but weaker futures orders put more pressure on at-once demand, Europe faces tough World Cup comps and Japan will be challenged by the events this March."
D.A. Davidson sees EPS of $1.10 and revs of $5.18 billion, both below the consensus. D.A. Davidson is modeling for a 100 basis point gross profit margin compression, "which mostly reflects the impact of rising input costs as well as cycling exceptionally strong margins a year ago." Further, "revenue growth should continue to be broad-based, we believe, encompassing the majority of geographies and both the footwear and apparel categories."
D.A. Davidson notes strong results from leading retailers may pave the way for Nike. Footlocker (NYSE: FL) comps in its quarter rose 7.3 percent, while Dicks Sporting Goods (NYSE: DKS) saw a 9.4 percent jump.
Finally, Nike has sponsored a lot, but the final two team in this year's NBA finals, the Heat and Mavericks, both sported Adidas uniforms. It won't affect Nike's fourth-quarter results, but investors may want to pay attention to this valuable revenue avenue, as it appears that many teams are wearing Adidas.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
The Street is pegging EPS at $1.16 and sales at $5.54 billion. If the company can hit these estimates, quarter-over-quarter earnings growth would be 7.4 percent while sales growth would be 9.1 percent. In last year's fourth-quarter, Nike posted EPS of $1.06 on revenue of $5.08 billion.
The stock is down about 4 percent year-to-date.
Nike has a P/E ratio of 17.2x next year's earnings, relatively cheap when compared to 20.9x for the industry.
The Street is mostly positive on Nike into earnings. Bloomberg data has 17 analysts with a Buy rating on the shares, 5 with a Hold, and none suggesting to Sell. The price target average is $95.50, with a low of $82 and high of $100. Nike traded in a range of $66.34 to $92.49 over the last 52-weeks.
Analyst Insight
Goldman Sachs is looking for earnings of $1.21 per share. The firm notes "shares have outperformed the market over almost any extended period of time; but in smaller windows shares tend to perform best when gross profit dollar growth is accelerating or stably robust, and track/underperform the S&P in periods of weak/weakening gross profit growth. With gross margin pressure intensifying, meaningful sales acceleration is a needed offset to drive gross profit dollar growth above last quarter’s mid single digit pace." Moving forward, Goldman expects Nike's sales acceleration as a balanced attack: "capacity constraints for hot styles should ease and data suggests Nike’s US footwear sell-through did pick-up considerably this quarter, but weaker futures orders put more pressure on at-once demand, Europe faces tough World Cup comps and Japan will be challenged by the events this March."
D.A. Davidson sees EPS of $1.10 and revs of $5.18 billion, both below the consensus. D.A. Davidson is modeling for a 100 basis point gross profit margin compression, "which mostly reflects the impact of rising input costs as well as cycling exceptionally strong margins a year ago." Further, "revenue growth should continue to be broad-based, we believe, encompassing the majority of geographies and both the footwear and apparel categories."
D.A. Davidson notes strong results from leading retailers may pave the way for Nike. Footlocker (NYSE: FL) comps in its quarter rose 7.3 percent, while Dicks Sporting Goods (NYSE: DKS) saw a 9.4 percent jump.
Finally, Nike has sponsored a lot, but the final two team in this year's NBA finals, the Heat and Mavericks, both sported Adidas uniforms. It won't affect Nike's fourth-quarter results, but investors may want to pay attention to this valuable revenue avenue, as it appears that many teams are wearing Adidas.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
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