Global leader in sports equipment and apparel,
), remains on our Neutral list with a target price of $82.00.
Nike's strong portfolio of globally recognized brands - such as
Nike, Converse, Chuck Taylor, Hurley, All Star, One Star, Star
Chevron and Jack Purcell - and its focus on innovation have
helped strengthen its leadership position.
We remain impressed with Nike's strong growth and innovation
trend that facilitated consistent positive earnings surprises for
6 straight quarters, alongside strong revenue growth and an
optimistic guidance. The company's average surprise for the last
6 quarters stands at 8.5%.
In second-quarter fiscal 2014, it posted an earnings surprise of
1.7% and a year-over-year increase of 4.0% in earnings per share,
aided by healthy top-line growth across the globe, improved
margins and a reduced tax rate, offset by elevated SG&A
investments in the company's brands and business capabilities.
Net sales rose 8.0% year over year, driven by robust performance
across all geographical regions and product categories.
Following its strong second-quarter fiscal 2014 top and bottom
line results, the company came up with an impressive outlook for
the upcoming 2 quarters and the full year indicating that the
company's upbeat performance is expected to continue in the near
future. Moreover, we believe based on Nike's remarkable top-line
growth as well as margin expansion, the stock will be a sound
asset for yield-seeking investors in the near term.
Moreover, Nike aims to increase its global reach and market share
by aggressively expanding its operations in the emerging markets,
while focusing on direct-to-consumer business and other brands,
which augur well for future operating performance. Collectively,
these strategies position the company strongly among competitors
such as Adidas AG and
Brown Shoe Co. Inc.
Though encouraged by the above mentioned positives, we believe
the stock has limited upside potential as these positive
attributes are already priced into the stock. Furthermore, we
expect soft discretionary spending and intense competition amid
rapidly changing customer preferences to undermine Nike's future
prospects. Moreover, our Zacks Rank #3 (Hold) for the stock
justifies the Neutral stance.
Other Stocks Worth Considering
Better-ranked stocks in the sports retail industry include
Skechers USA Inc.
Deckers Outdoor Corp.
). Both the companies carry a Zacks Rank #2 (Buy).
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
SKECHERS USA-A (SKX): Free Stock Analysis
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