After reporting its financial results for the first quarter of fiscal 2016, Nike Inc. (NKE) saw its stock surge to all-time highs of over $125 a share. This jump mainly came from the positive results that were found in its earnings report released yesterday as the company was able to beat analyst expectations once again.
Nike reported several incredibly impressive figures from this past quarter, ones that would be more typical of a growing small cap company, not a large cap company that, as of today's surge, has a market cap of over $100 billion.
Firstly, Nike reported EPS of $1.34, well above the Zacks Consensus Estimate of $1.19 that was predicted, and representing EPS year over year growth of 23%. Net sales increased 5.4% to $8.414 billion, which was also above the estimate from Zacks of $8.216 billion. The major bottom line growth can be attributed to several factors, including a surge in the top line, gross margin improvement, a lower tax rate, reduced share count, and leverage in selling, general, and administrative expenses.
The company also saw impressive growth in its NIKE and Converse Brands in the last quarter. The Nike Brand saw growth across all regions and in almost every major product category, and Nike's Converse Brand saw its revenues grow 3% to $555 million on a currency neutral basis.
Several analysts have said they believe Nike's growth and impressive figures are sustainable moving forward, pointing to the major growth seen in the company's global future orders. Nike's global future orders, which are slated for delivery between September 2015 and January 2016, climbed a remarkable 9% year over year. In currency neutral terms, this was a 17% increase, well above the expected 11% to 12% increase.
Not only does Nike continue to grow its top line, but it also was able to improve its gross margin during the quarter. Gross profit improved 7.4% in Q1, due in part to increased average selling prices and persistent growth in higher margin direct to consumer (DTC) business.
Nike has had an incredible run over the years, but 2015 has been especially positive for the sports apparel leader as it has now become the Dow Jones Industrial Average's top performer this year. Nike's stock has gained 31% thus far in 2015, compared to an 8% decrease for the Dow. The company currently holds a Zacks Rank #3 (Hold), but as Nike continues to be incredibly successful and blow past expectations, that rank may be moved higher.
Nike is a stock that all investors may want to consider in their portfolios, as it serves as a stock that has growth opportunities, a dividend payment of $1.12 per share, and a business behind it that clearly works and has every chance to keep up its high levels of prosperity. Stay tuned to Zacks as Nike is likely to continue to be in the news with the levels of success it enjoys.
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