Shares of NIKE, Inc. NKE hit a 52-week high of $136.39 yesterday, after this athletic apparel, footwear and accessories retailer posted solid second-quarter fiscal 2016 results, wherein its bottom line beat estimates for the 14th straight quarter and future orders grew year over year. However, the Zacks Rank #3 (Hold) stock eventually closed at $128.71, reflecting a year-to-date increase of 36.9%.
NIKE flaunts a splendid earnings history and it has outperformed the Zacks Consensus Estimate by an average of 10.3% over the past four quarters.
The company’s second-quarter earnings per share of 90 cents surged nearly 22% year over year and outpaced the Zacks Consensus Estimate of 85 cents, mainly aided by gross margin improvement, lower tax rate and reduced share count, partly offset by higher selling, general and administrative (SG&A) expenses.
Moving to the top line, revenues of this sportswear retailer rose 4% to $7,686 million in the quarter. However, the figure fell short of the Zacks Consensus Estimate of $7,808 million due to the impact of currency headwinds, barring which, sales jumped 12%.
Further, NIKE’s global future orders, slated for delivery from December 2015 through April 2016, ascended 15% year over year. On a currency neutral basis, future orders soared 20%, reflecting rising demand for the company’s products. Further, this exceeded analysts’ expectations, driven by robust demand in China and North America.
NIKE’s solid quarterly performance reflects its focus on adopting innovations to keep up with customer demand. Despite the currency headwinds, the company’s results remain impressive, backed by its constant focus on exploiting growth opportunities and efficient risk management. Following an impressive first half, management remains optimistic about the rest of fiscal 2016, as is reflected by its reaffirmed outlook for the fiscal.
Well, this is not it. A look at NIKE’s robust financials and shareholder-friendly moves further underscore the company’s inherent strength and commitment toward shareholders. The company recently announced a new share buyback program worth $12 billion, a two-for-one stock split, alongside raising its quarterly dividend by 14%. The company anticipates its stock to begin trading at the split-adjusted rate on Dec 24, 2015.
Together, these factors highlight this Oregon-based retailer’s strong fundamentals, its focus on boosting shareholder-value and solid growth prospects, which is reason enough to instill confidence among investors.
Stocks to Consider
Better-ranked stocks in the same industry include Francesca's Holdings Corporation FRAN, with a Zacks Rank #1 (Strong Buy), and Caleres, Inc. CAL, with a Zacks Rank #2 (Buy). Another stock in the related textile-apparel space worth considering is Hanesbrands Inc. HBI, also carrying a Zacks Rank #2.
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