Nike Beats On The Top And Bottom Line

The athletic apparel giant Nike, Inc. (Ticker Symbol: NKE) reported earnings after the close on Tuesday, which were better than analysts were expecting.  The company reported an earnings per share beat of .86 cents per share vs. Wall Street analysts’ expectations of .70 cents per share.

Additionally, Nike reported a revenue beat of $10.66 billion vs. Wall Street analysts’ expectations of $10.44 billion.  The company stated that stronger results from its e-commerce business along with its new Joyride running shoe helped improve its quarterly results.

Nike stated in their conference call with analysts that online sales were up 42% while seeing double-digit growth out of its women’s business unit, which usually represents less than 25% of Nike’s overall sales. The company has vowed to champion its women’s business and has hired Serena Williams as a new women’s brand ambassador which will help bring brand recognition across the globe. Nike has added more sports bras with a larger array of sizes and has added a women’s addition to its very popular Jordan shoe brand to expand its reach with female shoppers.

The chart above is a long-term weekly chart of Nike’s stock price since 2009.  Nike began finding some price support after the great recession just under the $10.00 price level.  After the introduction of quantitative easing into the markets, the stock began to drift higher.  Between 2011 and 2013 the stock found support at its 100-week moving average before going on to rally over 100% over the next three years before temporarily peaking in the first quarter of 2016, just under the $70.00 price level.

The stock spent the majority of 2016-2017 trading with a horizontal channel between the prices of $50.00 and $60.00 while finding some price support at its 200-week moving average. Nike’s stock broke out from its horizontal channel to the upside and went on to rally over 50% over the course of the next 18 months. The stock traded to an all-time high on September 25th, 2019 at the price of $92.79.

(Chart above courtesy of ​​)

Based on a survey of 23 analysts offering 12-month price targets, the average price target for Nike’s stock is $100.23. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $90.81.

Nike has had the biggest back-to-school season so far this quarter due to the launch of its new sneaker subscription service for children called Nike Adventure Club. The subscription enables parents to buy shoes for their children between the ages of two and 10 on either a quarterly, monthly, or bi-monthly basis.  The fees start around $20 and can go up as high as $50.00. Nike’s kids business has gained some momentum and has grown over 11% in the past year.

Investors in the company should look to Nike’s next earnings release on December 22nd for fresh news within the company.


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