Snapshot of the series
Nike (NKE) reported its results for fiscal 2Q17 after the market closed on Tuesday, December 20, 2016. The results relate to the three-month period ended November 30, 2016. As in the company’s fiscal first quarter, the company beat Wall Street on revenues as well as earnings estimates. In this series, we’ll provide an in-depth view on Nike’s performance in fiscal 2Q17.
Fiscal 2Q17 results overview
Nike reported earnings per share (or EPS) of $0.50 in fiscal 2Q17, registering a year-over-year (or YoY) increase of 11%. In comparison, Wall Street had predicted a decline of 4.4% to $0.43. The current quarter marks the 18th consecutive earnings beat for Nike. Total sales rose 6.4% YoY to $8.18 billion, beating the consensus by $90 million.
Valuation update and stock recommendation
Nike (NKE) stock is currently trading at a one-year forward price-to-earnings ratio of 21.5x. This compares to 47x for Under Armour (UAA), 27x for Lululemon Athletica (LULU), and 20x for Columbia Sportswear (COLM).
The average 12-month price target by 34 analysts covering Nike is $62.22, indicating an upside of ~19% over the next one-year period.
Founded in 1968, Nike (NKE) is the world’s largest athletic footwear and apparel company. The company derives ~60% of its sales from footwear products, and its products are sold in more than 190 countries. Nike is included in the world’s most valuable brands list by Forbes, with a brand value of $27.5 billion.
On December 22, 2016, the company had a market capitalization of $87 billion. NKE forms part of the S&P 500 Index and the 30-stock Dow Jones Industrial Average Index. It constitutes 3.3% of the US Consumer Goods ETF (IYK) and 3% of the SPDR Consumer Discretionary Select Sector ETF (XLY).