Nike, Inc. (NKE - Analyst Report) , a global leader in sports equipment and apparel, is slated to report its second-quarter fiscal 2014 results on Dec 19, 2013. In the last quarter, it posted a positive surprise of 10.3%. Let’s see how things are shaping up for this announcement.
Factors this Past Quarter
Nike’s better-than-expected first-quarter fiscal 2014 performance came on the back of strong demand for NIKE branded products. The top-line growth of 8% was primarily driven by robust performances across all geographical regions, except for Greater China. Moreover, the company registered growth in all the product categories. Bottom line jumped 37% driven by increase in both revenues and margins, along with reduced tax rate and lower share count.
Our proven model does not conclusively show that Nike is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: ESP for Nike is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents.
Zacks Rank #2 (Buy): Zacks Rank #2 (Buy) lowers the predictive power of ESP. The Zacks Rank #2 when combined with an ESP of 0.00% makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Winnebago Industries Inc. (WGO - Analyst Report) , Earnings ESP of +10.26% and a Zacks Rank #1 (Strong Buy).
Walgreen Co. has an Earnings ESP of +1.39% and a Zacks Rank #3 (Hold).
Rite Aid Corporation (RAD - Analyst Report) , Earnings ESP of +25.00% and a Zacks Rank #3 (Hold).