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Why Nike’s Top and Bottom Lines Rose in Fiscal 2016

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Price movement

Nike (NKE) has a market cap of $89.4 billion. It rose 2.3% to close at $53.09 per share on June 28. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.1%, -5.2%, and -14.6%, respectively, on the same day.

NKE is trading 1.9% below its 20-day moving average, 5.9% below its 50-day moving average, and 11.9% below its 200-day moving average.

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Related ETF and peers

The iShares Russell Top 200 Growth ETF (IWY) invests 1.2% of its holdings in Nike. The ETF tracks an index of US large-cap growth stocks selected from 200 of the largest US companies by market cap. The YTD price movement of IWY was -1.9% on June 28, 2016.

The market caps of Nike’s competitors are as follows.

  • F. Corporation (VFC) — $24.6 billion
  • Under Armour (UA) – $15.5 billion
  • Skechers USA. (SKX) – $4.4 billion

Nike in fiscal 4Q16 and fiscal 2016

Nike reported fiscal 4Q16 revenues of $8.2 billion, a rise of 5.1% from $7.8 billion in fiscal 4Q15. Revenue of footwear and apparel brands rose 6.3% and 3.9%, respectively, and revenues from equipment fell 5.8% in fiscal 4Q16 from fiscal 4Q15. Revenues from Western Europe, Greater China, and Japan rose 18.5%, 18.1%, and 21.7%, respectively. Revenues from Central & Eastern Europe and emerging markets fell 4.2% and 6.6%, respectively, in fiscal 4Q16 compared to fiscal 4Q15.

Its net income fell to $846.0 million in fiscal 4Q16 compared to $865.0 million in fiscal 4Q15. It reported EPS (earnings per share) of $0.49 for fiscal 4Q16 and fiscal 4Q15.

In fiscal 4Q16, the company repurchased a total of 9.0 million shares worth ~$540 million under the share repurchase program of $12 billion approved by the board of directors in November 2015.

Fiscal 2016 results

In fiscal 2016, Nike reported revenue of $32.4 billion, a rise of 5.9% YoY (year-over-year). The company’s gross profit margin rose by 0.43% in fiscal 2016. Its net income and EPS rose to $3.8 billion and $2.16, respectively, in fiscal 2016 compared to $3.3 billion and $1.85, respectively, in fiscal 2015.

Nike’s cash and cash equivalents fell 18.5%, and its inventories rose 11.6% in fiscal 2016. Its current ratio and debt-to-equity ratio rose to 2.8x and 0.75x, respectively, in fiscal 2016 from 2.5x and 0.70x, respectively, in fiscal 2015.

In fiscal 2016, the company repurchased a total of 55.4 million shares worth of ~$3.2 billion at an average price of $58.44, under the old and new share repurchase program of $8 billion and $12 billion, respectively.

On the future order, as of May 31, 2016, Nike has scheduled delivery of $14.9 billion worth of orders from June until November 2016, a rise of 8% in orders compared to the prior year and a rise of 11% on a currency-neutral basis.

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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