What to Expect from Nike’s Fiscal 3Q17 Earnings

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What to Expect from Nike’s Fiscal 3Q17 Earnings PART 1 OF 7

Will Nike Beat Expectations Again in 3Q17?

Nike’s 3Q17 earnings preview

Nike (NKE), the world’s largest apparel company, is slated to release its results for fiscal 3Q17 on Tuesday, March 21, 2017. Wall Street is expecting a 3.6% YoY (year-over-year) decline in Nike’s 3Q17 earnings to 53 cents per share on total sales of $8.5 billion.

Will Nike Beat Expectations Again in 3Q17?

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The company remained strong during the first half of the fiscal year and exceeded both revenue and earnings expectations in the first and the second quarters. Earnings per share (or EPS) rose 9% YoY in 1Q and 11% YoY in 2Q. In comparison, Wall Street had predicted a fall in profits by 16.7% and 4.4% in these two quarters. Year-to-date, total sales rose 7.1% YoY to $17.2 billion.

About Nike

Founded in 1968, Nike (NKE) is the world’s largest athletic footwear and apparel company. The company derives around 60% of its sales from footwear products. Its products are sold in over 190 countries.

The company has a market capitalization of $94.8 billion as of March 15, 2017, and forms a part of the S&P 500 Index and the 30-stock Dow Jones Industrial Average Index. It constitutes 3.4% of the U.S. Consumer Goods ETF (IYK) and 3.1% of the SPDR Consumer Discretionary Select Sector ETF (XLY).

Valuation updates and stock recommendations

Nike’s stock is currently trading at a one-year forward price-to-earnings ratio of 23.6x as compared to 45x for Under Armour (UAA), 26.4x for Lululemon Athletica (LULU), and 20x for Columbia Sportswear (COLM).

The average 12-month price target by 34 analysts covering Nike is $62.47, indicating an upside of ~9% over the next one-year period.

22 of the 34 analysts have recommended a “buy” on the stock, 11 have recommended a “hold,” while only one analyst has recommended a “sell.”

What’s in this series?

In this series, we’ll look at Nike’s year-to-date performance and discuss its expected performance in 3Q17. We’ll also briefly touch on the company’s stock market performance and Wall Street’s recommendations on the company.


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