Nike Inc. (NKE) has been one of the best performing stocks in my portfolio over the past decade. This one was an easy call because Nike dominates the athletic apparel market and shows absolutely no signs of letting down. Let’s take a look at the good news from the company’s earnings report.
- Nike’s revenue increased 10 percent to $4.8 billion.
- Net income rose 22% over the past quarter.
- Earnings per share came in at 94 cents per share. (6 cents higher than expectations)
- Orders are 11% higher than they were last year.
- Gross margins of 45.3%.
- Nike regained its pricing power and did not have to discount products to sell inventory.
The stock has been on a good run with shares up nearly 40% this year. Shares of Nike surged to a new 52 week high of $92.49 today. The stock is down 5% in the after hours market and has dropped to $87.41. Shares are down because analysts wanted to see 12 to 13% growth in future orders. The one concern for Nike is that margins may be squeezed in the future due to higher input costs.
I think that if the weakness persist in the stock that investors should take advantage. If the stock hits $83, investors should use that opportunity to pounce on shares. (I was even buying shares of Nike when it was at $39 a share 18 months ago!)
I am looking for a stock split next year as the company has historically split shares whenever the stock price went over $100.
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