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Where is NIKE Stock Headed after Mixed Q4 Earnings?
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The stock price of the athletic apparel retailer NIKE Inc. NKE has rebounded considerably after the decline witnessed over the mixed fourth-quarter fiscal 2016 results reported after the market closed on Jun 28. Despite a 4% drop in share price in the after-hours session that day, the stock has bounced back with nearly 5% rise witnessed since the earnings release.
The negative investor reactions immediately after the earnings release were primarily due to the third consecutive sales miss as well as a slowdown in future orders. The sales were impacted by currency headwinds while future orders lagged expectations due to stiff competition from rivals which weighed in on the demand for NIKE’s basketball shoes.
Going into fiscal 2017, Nike expects currency woes to linger and impact results, aggravated by Brexit which has increased the volatility of global currencies. As a result of which the company expects revenue in the first half of fiscal 2017 to likely suffer a stronger impact from the fluctuating currencies than the latter half. Consequently, the company provided a bleak outlook for first quarter fiscal 2017.
Going by the company’s expectations, the Zacks Consensus Estimate for fiscal 2017 and fiscal 2018 also trended down in the last 7 days.
Another major issue that Nike continues to face is severe competition from its rivals the likes of Adidas AG (ADDYY - Free Report) , Under Armour Inc. (UA - Free Report) and Skechers U.S.A. Inc. (SKX - Free Report) , who have continued to grow successfully.
Meanwhile, the stock’s recovery can be attributed to the strong earnings performance and the brand strength. Nike’s robust growth and innovation efforts have been evident in every quarter’s results for over three fiscal years now, as the company delivered positive earnings surprises for 16 straight quarters, with an average surprise of 8.3% over the trailing four quarters.
Nike posted its fourth-quarter fiscal 2016 results, wherein earnings beat estimates and were flat year over year. Also, the company witnessed strength in its brands as sales for its NIKE brand grew 8%, its direct-to-consumer revenues grew 23%, and its Converse brand saw an increase of 18%, all on a constant currency basis. All these factors make Nike’s growth prospects apparent.
Also, one cannot forget that Nike remains well positioned to gain from its customer-centric approach, innovative products and a strong brand portfolio. This along with Nike’s desire for increasing its global footprint, popularity and market share demonstrates its growth appetite.
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Where is NIKE Stock Headed after Mixed Q4 Earnings?
The stock price of the athletic apparel retailer NIKE Inc. NKE has rebounded considerably after the decline witnessed over the mixed fourth-quarter fiscal 2016 results reported after the market closed on Jun 28. Despite a 4% drop in share price in the after-hours session that day, the stock has bounced back with nearly 5% rise witnessed since the earnings release.
The negative investor reactions immediately after the earnings release were primarily due to the third consecutive sales miss as well as a slowdown in future orders. The sales were impacted by currency headwinds while future orders lagged expectations due to stiff competition from rivals which weighed in on the demand for NIKE’s basketball shoes.
Going into fiscal 2017, Nike expects currency woes to linger and impact results, aggravated by Brexit which has increased the volatility of global currencies. As a result of which the company expects revenue in the first half of fiscal 2017 to likely suffer a stronger impact from the fluctuating currencies than the latter half. Consequently, the company provided a bleak outlook for first quarter fiscal 2017.
Going by the company’s expectations, the Zacks Consensus Estimate for fiscal 2017 and fiscal 2018 also trended down in the last 7 days.
Another major issue that Nike continues to face is severe competition from its rivals the likes of Adidas AG (ADDYY - Free Report) , Under Armour Inc. (UA - Free Report) and Skechers U.S.A. Inc. (SKX - Free Report) , who have continued to grow successfully.
Meanwhile, the stock’s recovery can be attributed to the strong earnings performance and the brand strength. Nike’s robust growth and innovation efforts have been evident in every quarter’s results for over three fiscal years now, as the company delivered positive earnings surprises for 16 straight quarters, with an average surprise of 8.3% over the trailing four quarters.
NIKE INC-B Price and Consensus
NIKE INC-B Price and Consensus | NIKE INC-B Quote
Nike posted its fourth-quarter fiscal 2016 results, wherein earnings beat estimates and were flat year over year. Also, the company witnessed strength in its brands as sales for its NIKE brand grew 8%, its direct-to-consumer revenues grew 23%, and its Converse brand saw an increase of 18%, all on a constant currency basis. All these factors make Nike’s growth prospects apparent.
Also, one cannot forget that Nike remains well positioned to gain from its customer-centric approach, innovative products and a strong brand portfolio. This along with Nike’s desire for increasing its global footprint, popularity and market share demonstrates its growth appetite.
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 >>