Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Nike (NKE) has not been a barn burner of late, but continues a slow and steady path upward and the business continues to be a leader within its niche. I’ve often called Apple the Nike of computers/gadgets as both are able to charge a premium for what is in essence a commodity business – the brands mean a ton. The company reported earnings last night and steady as she goes with 14% revenue growth and net income growth of 7%. Margins have been pressured – down 2% in the quarter on gross, which is similar to the previous quarter (-2.6%). This is definitely an issue, but the market has been kind in overlooking it at this point. The company also announced a small buyback of 2.5M shares for under $250M (keep in mind this is a $50B market cap).
Technically the stock came in to touch the 20 day moving average for the first time all year (!) during yesterday’s selloff but investors said “no sweat” and were happy to buy the dip ahead of earnings. Not my cup of tea, but it’s been working in 2012 – so far. The stock is up fractionally in premarket.
Via AP:
- Nike Inc.’s third-quarter results demonstrated the sneaker and athletic gear maker’s global popularity on Thursday, when it said its revenue rose in all geographic regions, with particular strength in North America and emerging markets. The world’s largest maker of athletic shoes and clothes also said its orders heading into spring were up 15 percent from a year ago, signaling continued strong demand for its goods ahead of the Olympics and European soccer championships in June.
- The results beat analysts’ expectations. But higher costs ate into Nike’s gross margin, or the amount of each dollar in revenue a company actually keeps. Consumer product makers across the board are facing high costs for materials, labor and freight. Nike said some of its costs were easing, though its labor costs remain high.
- Net income for the quarter that ended Feb. 29 rose to $560 million, or $1.20 per share. That’s compared with $523 million, or $1.10 per share, in last year’s fiscal third quarter. And it beats the $1.17 per share that analysts polled by FactSet expected on average.
- The company said revenue rose 15 percent to $5.85 billion, just beating the $5.82 billion analysts expected. North American revenue rose 17 percent, Western Europe revenue rose 4 percent, Central and Eastern Europe revenue rose 9 percent, China rose 25 percent and emerging markets rose 23 percent.
- In its fiscal fourth quarter, the company expects revenue to rise by a percentage in the low double digits, mainly driven by sales of its Nike and Converse brands. It expects its earnings per share to grow by a percentage in the mid-teens.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
