Global leader in sports equipment and apparel,
), remains on our Neutral list with a target price of $75.00.
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.
Nike is striving to find opportunities to expand its global
footprint and augment its market share through acquiring new
brands, developing its direct-to-customer business and divesting
underperforming brands. Collectively, these strategies position
the company strongly among competitors such as
Brown Shoe Co. Inc.
Moreover, this footwear and athletic apparel retailer has
outperformed the Zacks Consensus Estimate in the trailing 5
quarters, with an average beat of 9.9%. In the most recent
quarter, it posted an earnings surprise of 10.3% and a 37.0%
increase in earnings per share, aided by healthy top-line growth,
improved margins, reduced tax rate and lower share count. Net
sales rose 8.0% year over year, driven by the high demand for the
Going forward, we expect Nike's upbeat performance to continue
given the company's impressive guidance for fiscal 2014. The
company anticipates revenue growth for fiscal 2014 to be in the
high single-digit range, while gross margin is projected to
expand by 50 basis points (bps) on a year-over-year basis. With
impressive top-line growth as well as margin expansion, Nike will
be a sound asset for yield-seeking investors in the near future.
Apart from strong quarterly results, this Zacks Rank #2 (Buy)
company's growth prospects appear promising. We believe the
company's prudent investment as well as strategic initiatives
toward product innovation and brand building will increase its
customer base and profitability. Going forward, we expect Nike's
top-line growth to remain strong, given an increase in future
On the flip side, rising commodity prices pose a challenge and
may undermine the company's future performance. In addition, we
expect sluggish discretionary spending and intense competition
amid rapidly changing customer preferences to dent Nike's future
prospects. Consequently, we prefer to keep to the sidelines at
Other Stocks Worth Considering
Other stocks that are worth a look in the sports retail industry
include Brown Shoe Co. and
Deckers Outdoor Corp.
). Both the companies carry a Zacks Rank #1 (Strong Buy).
ADIDAS AG-ADR (ADDYY): Get Free Report
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
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