Nike Inc. (NYSE: NKE) earnings: current market consensus sees company diluted earnings per share to be $0.64. Diluted earnings per share came out to be $0.69, beating market consensus by $0.05. This was announced during the earnings call held during off-market trading hours on June 28, 2018. The growth was mainly attributable to increased sales, with the China market spearheading growth, and improved gross margins. The earnings call has had a very positive tone to it, implying current strong growth to expand into the foreseeable future… “strong, sustainable, profitable growth.”
2019 Outlook (positively updated after NKE earnings)
$15 billion share repurchase program after 2019. The current program of $12 billion repurchases is expected to conclude in 2019.
high-single-digit revenue growth in the financial year 2019 (an increase from the previous outlook)
expansion in gross margin is now expected to be roughly 50 basis points or slightly greater (an increase from the previous outlook)
Share price development before and after NKE earnings
Continued buy interest in NIKE since breaking the $60ish level in November of 2017 cannot be overlooked. Growth since then ticks today at 19%. This is as of June 28, 2018, prior to the earnings announcement. We have even seen growth peak of about 26.5% during the month of June 2018.
Share prices jumped more than $8 (11%) right after the announcement. The growth now ticks at 33% compared to November 2017 levels.
NIKE has generally been experiencing growth in all their KPIs, Revenues, EPS and ROI. Their motto to be “a growth company” has been supported by strong revenue growth, especially in China.
They are also engaged in long-term active stock repurchase programs, adding more bang to the buck, adding to the current buying pressure.
Current price levels already suggests strong growth suspects. The revised 2019 outlook seems to have quickly been imputed into the current market price as well. Is the market ready to give more imputed goodwill for growth prospects?
To conclude, we would much rather see some form of buying opportunity.
We don’t see these trends to be flattening out. The year 2018 continued the trend as expected.
About the company
NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiary brands include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories; and Hurley, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.
Conflicting interest disclosure
We do not hold any interest in NKE. However, we may engage in positions within 72 hours depending on the signals provided by our trading strategies.
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