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Nike’s Performance Is Compelling, Beating Wall Street Estimates

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Nov. 20 2020, Updated 11:54 a.m. ET

Recapping Nike’s performance

Nike (NKE) reported revenue of $15.4 billion in the first two quarters of fiscal 2015[1. The fiscal year ending May 31, 2015.]—a 14.6% year-over-year increase. Nike’s performance over the past few years has been compelling. The company has beaten consensus Wall Street revenue estimates in its last four quarters and earnings estimates in its last ten quarters. Nike’s revenue jumped on strong consumer demand for its innovative products. The Nike brand recorded double-digit revenue growth worldwide in both 1Q15 and 2Q15. In 2Q15, Nike recorded double-digit growth in all geographies except Japan in constant currency terms.

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Earnings analysis

Nike’s net income (NKE) rose 22.8% to $1.6 billion in 1H15. The increase stemmed from higher revenue and an expansion in the company’s profitability margins. The company reported earnings per share (or EPS) at $1.09 and $0.74 in 1Q15 and 2Q15, respectively. EPS rose by over 25% year-over-year in both quarters.

Dividend and share repurchases

Nike has raised its dividend payment for 13 years in a row. It paid out $0.52 per share as dividends in 1H15, up 15.6% year-over-year. The company also purchased 15.7 million shares at an average cost of $79.31 per share. The total cost of repurchases came to ~$1.2 billion. Repurchases have been accretive to shareholders. The company’s stock traded at a price of $96.91 on March 6, 2015.

Peer comparison

Nike’s competitors Under Armour (UA), Skechers (SKX), and Columbia Sportswear (COLM) have posted record results in their last fiscal years ending December 2014. SKX’s net sales rose 28.8% year-over-year to $2.4 billion in 2014. Under Armour (UA) revenues grew 32.2% year-over-year, crossing $3 billion for the first time ever. COLM’s revenue rose 25% year-over-year to $2.1 billion in 2014—a new record.

However, Nike dwarfs these peers in size. Its market leadership position, particularly in footwear, is unparalleled. Nike’s revenues for the trailing 12 months came in at over $29 billion.

NKE and UA constitute ~0.4% of the portfolio holdings of the iShares Core S&P 500 ETF (IVV).

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