NIKE, Inc. NKE has been riding on robust growth and product innovation efforts, along with its solid financials and constant endeavors to undergo expansion. It seems that the company is leaving no stone unturned to live up to its “Just Do It“ tagline. Nike’s solid momentum is evident from the fact that its shares have surged 14.3% year to date.
Also, these growth drivers have helped the company to deliver positive earnings surprises for 12 straight quarters now, thereby representing an average surprise of 9.2%. In fourth-quarter fiscal 2015, Nike witnessed enhanced margins, apart from recording splendid top- and bottom-line results which not only exceeded expectations, but also improved year over year.
The spectacular results encouraged management to provide a positive outlook for fiscal 2016 as it expects the strong momentum witnessed in fiscal 2015 to continue. Consequently, the Zacks Consensus Estimate trended upward.
As part of its growth efforts, Nike seeks opportunities to strengthen its global footprint, popularity and market share. In the process, over the years it has acquired well-known brands such as Converse, Hurley and others. Also, the company has been increasing its popularity by acquiring contracts to supply sports-related apparel, shoes, etc., to renowned teams and sports associations.
In this regard, Nike has signed contracts for supplying the official uniforms and apparel for the National Basketball Association and National Football League. Alongside, Nike is the footwear and apparel provider of USA Basketball, the governing body for the country’s Olympic teams, since 2006.
Nike aims at enhancing its digital development and direct-to-consumer business model in an attempt to broaden its ambit further. Taken together, these strategies not only facilitate enhancement of market share, but also provide a competitive platform.
Additionally, Nike boasts a strong balance sheet, which offers it the financial flexibility to drive future growth. Further, the company remains committed toward enhancing shareholder returns, as evident from its regular practice of returning value to shareholders in the form of share repurchases and dividends.
However, the positivity surrounding Nike’s strong quarterly performance and business growth momentum may be marred by unfavorable currency fluctuations given its exposure in the international market. Though Nike posted strong results for the fourth quarter of fiscal 2015, the company expects its future performance to be somewhat affected by the ongoing currency headwinds.
Zacks Rank
Nike currently carries a Zacks Rank #2 (Buy). Other stocks in the same industry that warrant a look are Caleres, Inc. CAL, Sequential Brands Group, Inc. SQBG and Skechers USA Inc. SKX, all carrying a Zacks Rank #2.
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