Leading sportswear retailer, Nike Inc. (NKE) is slated to report its first-quarter fiscal 2015 results after the market closes on Sep 25, 2014. In the last quarter, it posted a positive surprise of 2.63%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Nike has been posting solid quarterly results benefiting from its focus on innovation, taken up to keep up with customer demand. In spite of macroeconomic headwinds, the company’s results remain impressive, backed by its continuous utilization of growth opportunities along with risk management. Going forward, Nike plans to continue on the same path to enhance shareholder value in the long run.
Looking ahead, the company intends to continue investing in growth strategies in fiscal 2015. For first-quarter fiscal 2015, the company anticipates revenue to grow in the low-double-digit range and gross margin to improve 75 bps driven by growth in direct-to-consumer business, better product mix and price hike to offset inflation.
Earnings Whispers?
Our proven model does not conclusively show that Nike is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to surpass estimates. However, this is not the case here, as you will see below:
Zacks ESP: ESP for Nike is 0.00%. This is because the Most Accurate estimate stands at 88 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank #4 (Sell): Nike’s Zacks Rank #4 when combined with a 0.00% ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination to post an earnings beat:
Micron Technology Inc. (MU) holds an Earnings ESP of +3.70% and a Zacks Rank #2 (Buy).
Constellation Brands Inc. (STZ) has an Earnings ESP of +1.74% and a Zacks Rank #3 (Hold).
Costco Wholesale Corp. (COST) with an Earnings ESP of +0.66% carries a Zacks Rank #3.
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