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Will Nike's (NKE) Q4 Earnings Disappoint Ahead of Olympics?
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Leading sportswear retailer, Nike Inc. (NKE - Free Report) is slated to report its fourth-quarter fiscal 2016 results after the market closes on Jun 28, 2106. In the last quarter, it posted a positive surprise of 14.6%.
In fact, the company has delivered an average positive earnings surprise of 11.9% in the trailing four quarters. Nike’s bottom line beat the Zacks Consensus Estimate in each of the last four quarters. Let’s see how things are shaping up for this announcement.
Nike’s positive surprise history reveals that the company has been gaining from its customer-centric approach, innovative products and strong portfolio. Nike’s constant efforts to undertake innovations, its key growth driver, coupled with continued focus on enhancing retail and online customer experience, bode well. Also, Nike’s strong global future orders reflect the rising demand for its products.
Looking back at the last quarter, Nike’s earnings beat expectations for the 15th straight quarter while its top line succumbed to a miss due to foreign currency headwinds. Though management retained its outlook for fiscal 2016, we feel that the internationally-exposed Nike will remain prone to currency fluctuations. This may keep the company’s top-line performance muted. Further, we expect costs to remain high as the company continues to undertake heavy investments in advertising to leave a mark in the major sporting events, including the Rio 2016 Summer Olympics, which is scheduled in August.
This is likely to weigh on the company’s bottom line performance in the to-be reported quarter, as evident from the past trends. The company also takes a few quarters before stabilizing earnings after such heavy-advertising driven events.
Earnings Whispers
Our proven model does not conclusively show that Nike is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to surpass earnings estimates. However, this is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Nike is -2.08%. This is because the Most Accurate estimate stands at 47 cents per share, below the Zacks Consensus Estimate of 48 cents.
Zacks Rank: Nike carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination to post an earnings beat:
Lithia Motors Inc. (LAD - Free Report) , expected to report earnings on Jul 27, has an Earnings ESP of +2.04% and a Zacks Rank #3 (Hold).
AutoNation Inc. (AN - Free Report) , expected to report earnings on Jul 27, has an Earnings ESP of +0.95% and a Zacks Rank #3.
Blue Nile Inc. , expected to report earnings on Aug 5, has an Earnings ESP of +5.00% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Will Nike's (NKE) Q4 Earnings Disappoint Ahead of Olympics?
Leading sportswear retailer, Nike Inc. (NKE - Free Report) is slated to report its fourth-quarter fiscal 2016 results after the market closes on Jun 28, 2106. In the last quarter, it posted a positive surprise of 14.6%.
In fact, the company has delivered an average positive earnings surprise of 11.9% in the trailing four quarters. Nike’s bottom line beat the Zacks Consensus Estimate in each of the last four quarters. Let’s see how things are shaping up for this announcement.
NIKE INC-B Price and EPS Surprise
NIKE INC-B Price and EPS Surprise | NIKE INC-B Quote
Factors Influencing this Quarter
Nike’s positive surprise history reveals that the company has been gaining from its customer-centric approach, innovative products and strong portfolio. Nike’s constant efforts to undertake innovations, its key growth driver, coupled with continued focus on enhancing retail and online customer experience, bode well. Also, Nike’s strong global future orders reflect the rising demand for its products.
Looking back at the last quarter, Nike’s earnings beat expectations for the 15th straight quarter while its top line succumbed to a miss due to foreign currency headwinds. Though management retained its outlook for fiscal 2016, we feel that the internationally-exposed Nike will remain prone to currency fluctuations. This may keep the company’s top-line performance muted. Further, we expect costs to remain high as the company continues to undertake heavy investments in advertising to leave a mark in the major sporting events, including the Rio 2016 Summer Olympics, which is scheduled in August.
This is likely to weigh on the company’s bottom line performance in the to-be reported quarter, as evident from the past trends. The company also takes a few quarters before stabilizing earnings after such heavy-advertising driven events.
Earnings Whispers
Our proven model does not conclusively show that Nike is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to surpass earnings estimates. However, this is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Nike is -2.08%. This is because the Most Accurate estimate stands at 47 cents per share, below the Zacks Consensus Estimate of 48 cents.
Zacks Rank: Nike carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination to post an earnings beat:
Lithia Motors Inc. (LAD - Free Report) , expected to report earnings on Jul 27, has an Earnings ESP of +2.04% and a Zacks Rank #3 (Hold).
AutoNation Inc. (AN - Free Report) , expected to report earnings on Jul 27, has an Earnings ESP of +0.95% and a Zacks Rank #3.
Blue Nile Inc. , expected to report earnings on Aug 5, has an Earnings ESP of +5.00% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>