Nike (NYSE: NKE) will be reporting numbers for the second quarter on Wednesday, December 17. What should investors be expecting from the famous sneaker company?
Well, according to this earnings source, Wall Street thinks that Nike can deliver somewhere around $0.79 per share. If management hits this number, then we're talking growth of about 11%. Not the most exciting growth rate ever seen, but shareholders learn to appreciate low double-digit growth expansion in bad economic times. And judging by recent history, it seems like a good bet that Nike will, at the very least, meet expectations. The company has beaten the analysts on a pretty consistent basis, so even if the global recession has caught up to Nike, I'd have to assume that they'll at least deliver what's expected of the business (my guess is that we'll see a beat). Back in September, Michael Fowlkes wrote about Nike's beat in Q1.
Shareholders will be looking for clues as to how Nike is handling the tough climate. Margins will be looked at, and the effect of currency exchange rates will be scrutinized. The big question will center on what happens next. Will consumers still want to spend good money on expensive footwear? Nike does have great brand equity, as I noted back in the summer, but you pay up for its products. How attractive can that be with job cuts dominating the news flow? Shareholders should also see how many shares of stock management saw fit to take out of the float. That will indicate a level of confidence in its current business model.
Don't get me wrong, I'm not down on Nike for the long term. The stock, however, is currently closer to a 52-week low than a 52-week high. I think it may be cheap, but it could head lower from here if the major market averages start spiraling in the downward direction. As we all know, that's the perpetual risk of a bear market.
Although I won't be trading Nike ahead of its earnings, it's definitely one that I would have considered had the market been a bit stronger. I think the stock could get an uptick after the Q2 stats are released. In the end, though, I wouldn't chance it.
Disclosure: I don't own any company mentioned; positions can change at any time.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
12-16-2008 @ 4:31PM
Iridium said...
Nike is a mirage. It is a giant scam. The company makes its money off of forcing retailers to take thier products and transfering inventory to Niketown stores.
The ammount of product actually sold to consumers is a far cry from the BS numbers Nike puts on the books.
If the SEC had any teeth left they would be wise to investigate Nike for every fraudulent thing in the book. Stock manipulation, check. Securities fraud, check. Insider trading, check. Anticompetative practices, check. Reastraint of trade, check. Human rights violations, check.
Take a walk outside and see if there are more people wearing Nike than in the 1980s. I don't see them. Nike is one giant lie.