On Oct 10, 2014, we issued an updated research report on Nike, Inc. (NKE), following its spectacular start to fiscal 2015.
The company’s earnings of $1.09 per share for the first quarter, reflected an increase of 27% year over year, and surpassed the Zacks Consensus Estimate of 88 cents by 21 cents.
Results were driven by an impressive top line, improvement in gross margin, lower tax rate and a decline in average share count. The company’s success in the quarter is mainly attributable to the improved sports gear sales during the soccer World Cup and the increasing trend of wearing fitness clothing outside the gym, which contributed to top-line growth.
Top line surged about 15% to $7,982 million and came ahead of the Zacks Consensus Estimate of $7,804 million on the back of robust demand for its brands and significant growth in its main categories, and all its locations. Following the solid results, Nike came up with an impressive outlook for the upcoming quarter and fiscal 2015, as it expects the rest of the year to display strength.
Further, we remain impressed with Nike’s strong growth and product innovation that are helping to strengthen its leadership position. Its strong portfolio of globally recognized brands like Converse, All Star, One Star and more, provide it with a competitive edge over peers like Brown Shoe Co. Inc. (BWS) and Adidas.
Additionally, Nike aims to increase its global reach and market share by aggressively expanding its operations in the global markets, while focusing on direct-to-consumer business and other brands, which augur well for its future operating performance.
Nike maintains its focus on adopting innovations to keep up with customer preferences. In spite of macroeconomic headwinds, the company doesn’t fail to impress us, given its commitment toward utilizing growth opportunities along with efficient risk management. Going forward, Nike plans to follow these standards in order to enhance shareholder value in the long run.
Nike currently has a Zacks Rank #1 (Strong Buy).
Key Picks from the Sector
Other stocks looking attractive at current levels include Skechers USA Inc. (SKX) and Iconix Brand Group, Inc. (ICON). Skechers sports a Zacks Rank #1, while Iconix Brand carries a Zacks Rank #2 (Buy).
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