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Bull of the Day: Nike (NKE)

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Founded in 1967, Nike (NKE - Free Report) is one of the world’s most popular shoemakers, designing, developing, and marketing athletic footwear, apparel, and equipment for men, women, and kids. With the help of a strong brand portfolio, including Nike Pro, Nike Golf, Nike+, and Air Jordan, Nike is known for offering premium, well-designed, and high-quality products that are in-line with the latest trends.

Q1 Earnings Recap

Nike popped over 9% after the company reported blowout first quarter earnings earlier this month.

Revenue fell 1% year-over-year to $10.6 billion, but profits actually increased; net income rose 11% to $1.52 billion and earnings per share hit $0.95, easily beating the consensus estimate.

Digital sales soared 82% thanks to strong performance in all of its regions. Notably, the Europe, Middle East, and Africa (EMEA) region saw triple-digit growth over the prior-year quarter. Direct sales, which include Nike’s stores and online platforms, rose 12% to $3.7 billion.

Overall, the sportswear giant’s Q1 results showed how resilient the company is amid this year’s unprecedented headwinds, and how important its digital channel has become to its business.

"Our results this quarter continue to demonstrate Nike's full competitive advantage, as we strengthen our position in the midst of disruption. In this dynamic environment, no one can match our pace of launching innovative product and our brand's deep connection to consumers,” said CEO John Donahoe.

NKE Breaks Out

 

NIKE, Inc. Price and Consensus

 

Since March 23, shares of Nike have surged over 84% compared to the S&P 500’s 44+% increase. Earnings estimates have been rising too, and NKE is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, 13 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 44 cents to $2.78 per share. Earnings are expected to grow almost 74% compared to the prior year period. 2021 looks strong too, and earnings should see double-digit year-over-year growth next year as well.

On Nike’s earnings call, management said that it anticipated revenue growth of high single digits to low double digits for fiscal 2021.

The company has also re-opened about 90% of its brick-and-mortar sales locations worldwide, and even though customer volume remained lower than average, its new product releases have been well-received.

With all of this in mind, Nike has all the pieces in place to emerge from the coronavirus pandemic an even stronger company.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep NKE on your shortlist.

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