Nike shares gain 8% on big EPS upside; Stock seen as an 'undervalued outperfomer'
- Wall St rises on Alphabet boost, payrolls data in focus
- Can S&P 500 rally without the Magnificent 7 leading the way? 'Easy' says BofA
- Analysts remain cautious on Chewy as shares drop 10% weak guidance
- AI sentiment toward Google seen improving rapidly after Gemini launch; Shares gain
- Yen roars, bonds flinch as Japan teases rates shift
Investing.com -- Nike reported much better than expected fiscal first-quarter earnings that overshadowed a miss on revenue, pressured by weakness in North America and an economic slowdown in its key China market.
Nike Inc (NYSE: NKE) rose 8% in pre-market Friday trade following the report.
Nike reported EPS of $0.94 on revenue of $12.94 billion. Analysts polled by Investing.com anticipated EPS of $0.75 on revenue of $13.02B.
Nike brand digital sales increased 2% but growth in EMEA, Greater China and APLA was partially offset by a decline in North America.
Sales in North America fell 2%, while in China, a key market for the company, sales rose 5% to $1.74B, though was short of StreetAccount estimates for $1.84 billion.
Gross margin decreased 10 basis points to 44.2%, pressured by "higher product costs and unfavorable changes in net foreign currency exchange rates, largely offset by strategic pricing action," the company said. Inventory levels decreased by 10% year-over-year.
The company maintained its FY24 guidance.
Bernstein analyst Aneesha Sherman said Nike delivered "a nice beat."
Nike used "the ~20c EPS beat to de-risk Q2 and cushion H2 - the best possible outcome we could have expected from this print. The combination of decelerating macro and debates on DTC and Running will keep an overhang over the stock ST - but we remain bullish on the stock LT as an undervalued outperformer, with EPS growth forecasts outperforming peers and valuation at a 5-yr low," Sherman wrote in a note.
BofA analyst Lorraine Hutchinson continues to see "a balanced risk/reward as an improving gross margin trajectory is offset by a challenging sales environment (particularly in wholesale)."
Additional reporting by Senad Karaahmetovic
You May Also Be Interested In
- Red-hot C3.ai stock drops 10% on soft outlook
- Webuy Global (WBUY) Reports 62% Increase in Revenue to $24.4 Million for the First Half of 2023
- Lee Enterprises (LEE) Reports Q4 Loss of $0.32/sh
Create E-mail Alert Related CategoriesAnalyst Comments, Earnings, Hot List, Investing
Related EntitiesSanford C. Bernstein, Earnings, Lorraine Hutchinson, Senad Karaahmetovic
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!