Nike (NKE) Stock Jumps Today on Strong Third Quarter Earnings
NEW YORK (TheStreet) -- Nike (NKE) - Get Report shares are up 3.7% to $101.96 in early market trading on Friday after the athletic shoe company reported better than expected third quarter profits after the closing bell yesterday.
The Beaverton, OR-based company reported a 16% rise in quarterly net income to $791 million, or 89 cents per diluted share on an adjusted basis, on revenue that grew 7% over the previous quarter to $7.46 billion.
Analysts on average were expecting the company to report earnings of 84 cents per diluted share on revenue of $7.62 billion. The company warned that a strengthening U.S. dollar would hurt revenue in the current quarter.
The company saw 6% revenue growth domestically while Chinese and Western European sales were both up double digits during the quarter. Worldwide futures orders, a key measurement of product demand, increased 2%, though the company noted that without currency exchange headwinds, futures orders increased by 11%.
Insight from TheStreet's Research Team:
Jim Cramer, Portfolio Manager of the Action Alerts Plus charitable trust, was extremely bullish in his note addressing Nike's earnings beat this morning on Real Money Pro despite the potential trouble that the rising dollar presents to the company's international profit margins. Cramer said:
Nike put on a clinic last night, a tour-de-force explainer why this is a must-own senior growth stock, and it was a stunner. You felt so great about this stock after this call was done, that you could overlook any weakness and embrace any strength.
First, Nike did what everyone should have done this quarter: just tell the story in constant currency. Nike's a worldwide company and it's obvious that it's got headwinds all over the place as the dollar has become cartoonish and garish in its strength. So Nike took the bull by the horns -- or at least the bullish dollar -- and said "you factor it in, we're not going to. We don't have to explain anything that's not our fault." Even when the company was questioned about being able to shift business to different venues to help on this issue, it didn't take the bait.
The impact? Instead of the call being one explanation of the weakness after another, you could use the call to figure out how strong Nike really is and recognize that the franchise is totally unassailable, no matter where it competes. In fact, the essence of this call is "we compete, we win, you figure out the currency."
Want more information like this from Jim Cramer BEFORE your stock moves? Learn more about RealMoney.com now.
Separately, TheStreet Ratings team rates NIKE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NIKE INC (NKE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: NKE Ratings Report
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