Though it has gone off the boil in the last 3 months, broadly 2018 has been a fantastic year for Nike shares. Opening at $63.08, the stock went on quite the run across the first 9 months, culminating in a record peak of $86.12 on September 21st.
Yet, as mentioned, the mega-brand hasn’t been able to sustain that climb in the final quarter. At one point dipping below $70 in November, a level not seen since mid-May, Nike shares now sit at a current trading price of $72.93.
Contributing to its recent cool-down was September’s Q1 statement. By most standards, the results were very strong. Revenue increased 10% to $9.95 billion, with net income surging 15% to $1.092 billion and diluted EPS rising 16% to 67 cents. Region-by-region, revenue was up 6% in North America, 3% in Europe, the Middle East & Asia, and 2% in Greater China. In Asia Pacific % Latin American revenue dipped 1%.
However, investors were in a picky mood, perhaps because the stock was trading at those aforementioned record highs. That gross margins only jumped 50 basis points to 44.2% was seen as a disappointment, despite being in line with expectations, as was the lack of upgrade to its Q2 guidance.
In terms of the second quarter, investors will want something tasty given that it saw the launch of the attention-grabbing campaign featuring NFL quarterback Colin Kaepernick. Analysts are expecting earnings of 45 cents per share, roughly in line with Q2 2018’s 46 cents, alongside a 7% rise in revenue to $9.2 billion.
Nike shares have a consensus rating of ‘Buy’ alongside an average target price of $86.54.
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