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Nike Stock Failed to Reap Benefits of Strong 3Q18 Results

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Mar. 27 2018, Published 7:05 a.m. ET

Market reaction to Nike’s 3Q18 results

As discussed, Nike (NKE) reported third-quarter results after the market closed on March 22. The company outperformed on both earnings and sales and signaled the end of a rough patch it faced in its North American market. However, its strong performance was not reflected in its stock price the next day. Its stock closed marginally higher at $64.63. A broader market sell-off related to fears about a possible trade war stopped its price from surging.

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Nevertheless, the sportswear giant’s performance was better than most competitors, who closed the day in the red. Skechers (SKX), Lululemon Athletica (LULU), and Columbia Sportswear (COLM), for instance, lost 3.6%, 1.9%, and 0.9%, respectively. The S&P 500 Index plunged 2.1%, while the seven-company S&P 500 Index was down 0.5%.

Nike’s year-to-date performance

Nike delivered a strong performance in the stock market during 2017 with a gain of 23% during the year. However, this year so far hasn’t been an extraordinary one for the company. It is up a modest 3.4% YTD and is trading around 9% below its 52-week high price.

Dividends

Nike announced a dividend of 20 cents per share on February 15, in-line with the previous quarter’s dividends. The company has been a regular dividend payer and has increased its dividend per share for about 16 years in a row. As a result, it is included in the list of dividend achievers, which consists of 270 companies that have increased their dividends for at least ten consecutive years.

However, the company has a low one-year forward dividend yield of 1.3%. Gap (GPS), Foot Locker (FL), and DSW (DSW) offer higher yields of 3.1%, 3.2%, and 3.7%, respectively. Nike is included in the Vanguard Dividend Appreciation ETF (VIG). VIG invests 2.2% of its portfolio in the company.

Read the next section to know about Wall Street’s view on Nike after its 3Q17 results.

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