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Moody’s Rated Nike’s Unsecured Note as ‘A1’

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Price movement

Nike (NKE) has a market cap of $86.0 billion. It rose 0.37% to close at $51.22 per share on October 18, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.2%, -6.8%, and -17.4%, respectively, on the same day. NKE is trading 3.4% below its 20-day moving average, 7.6% below its 50-day moving average, and 10.6% below its 200-day moving average.

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Related ETF and peers

The iShares Russell Top 200 Growth ETF (IWY) invests 0.98% 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 3.4% on October 18.

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

  • VF Corporation (VFC) — $22.6 billion
  • Under Armour (UA) —$15.5 billion
  • Skechers USA (SKX) — $3.6 billion

Latest news on Nike

Moody’s Investors Service has rated Nike’s proposed $1.5 billion senior unsecured note as “A1” and the company’s unsecured shelf program as “(P)A1.” Moody’s kept the company’s senior unsecured rating and commercial paper ratings at “A1” and “Prime-1,” respectively. Moody’s gave a “stable” rating outlook.

Moody’s added that “proceeds from this offering are expected to be used for general corporate purposes, which may include discharging or refinancing of debt, working capital, capital expenditures, share repurchases, as yet unplanned acquisitions of assets or businesses and investments in subsidiaries.”

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Performance of Nike in fiscal 1Q17

Nike (NKE) reported fiscal 1Q17 revenue of $9.1 billion, a rise of 8.3% from the $8.4 billion reported in fiscal 1Q16. Revenue from its Footwear, Apparel, and Equipment segments rose 6.8%, 8.9%, and 3.7%, respectively, and revenue from its Global Brand segment fell 42.3% between fiscal 1Q16 and fiscal 1Q17.

Nike’s revenue from North America, Western Europe, Central and Eastern Europe, Greater China, and Japan rose 6.1%, 7.4%, 9.7%, 15.1%, and 36.9%, respectively, in fiscal 1Q17. Its revenue from emerging markets fell 2.2% YoY (year-over-year) in fiscal 1Q17. The company’s gross profit margin fell 4.2% YoY.

Nike’s net income and EPS (earnings per share) rose to $1.3 billion and $0.73, respectively, in fiscal 1Q17, compared with $1.2 billion and $0.67, respectively, in fiscal 1Q16.

Its cash and cash equivalents fell 18.1%, and its inventories rose 10.9% YoY in fiscal 1Q17. Its current ratio fell to 2.7x, and its debt-to-equity ratio rose to 0.74x in fiscal 1Q17, compared with 2.8x and 0.61x, respectively, in fiscal 1Q16.

In fiscal 1Q17, Nike (NKE) repurchased 19 million shares for ~$1.1 billion. On August 31, 2016, it scheduled the delivery of $12.3 billion in orders between September 2016 and January 2017. This figure translates to a 5% YoY rise in orders and a 7% rise on a currency-neutral basis. Next, we’ll look at Honda Motor (HMC).

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