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NEW YORK (TheStreet) -- Nike (NKE) reports quarterly earnings after the markets close on Thursday, and Wall Street is expecting continued momentum in the sneaker company's sales in the U.S. and Western Europe, bolstered by a focus on basketball products and women's merchandise.

That said, analysts are worried that currency challenges in Nike's emerging-markets businesses may keep a lid on the Beaverton, Ore.-based company's sales growth rates. Several analysts pointed to "foreign exchange headwinds" that would put a cap on any upside potential to Nike's sales growth in the quarter.

Nike is expected to report fiscal first-quarter earnings of 88 cents a share on sales of $7.83 billion after the market closes, according to analysts surveyed by Thomson Reuters.

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Nike shares have risen 16.5% over the past 12 months, keeping pace with the S&P 500, which has risen nearly 17% over the same period. Here's what analysts are saying leading up to Nike's earnings.

Andrew Burns, D.A. Davidson (Neutral; $85 PT)

Nike once again a Back-to-School leader, but ancillary headwinds are mounting. We believe NKE's big growth drivers remained intact in F1Q15: North America and Western Europe growth, Direct-to-consumer outgrowth, and strength in the basketball and running categories. Simply put, Nike's biggest regions and categories represent its healthiest businesses at the moment. On the margin, a steeper currency headwind will weigh on reported growth rates, and economic troubles in Russia & Latin America further complicate the global picture. Additionally, a forthcoming increase in marketing spend from Adidas has the potential to stem market share losses for NKE's largest competitor. Lastly, the golf equipment is facing industry challenges. All in, Nike's core business remains quite strong, but we expect the listed headwinds to limit upward earnings revisions.

We expect c.c. futures orders to decelerate for the second consecutive quarter after recently peaking at 14% in 2Q14. Our modeled 10% c.c. futures order estimate would still reflect impressive growth, but would likely raise concerns around the sustainability of NKE's double-digit growth trajectory. With pricing and mix fueling a favorable gross margin tailwind, we will be looking for evidence NKE can reign in SG&A spend to deliver meaningful EBIT margin improvement.

We are modeling sales growth of 11% and EPS of 86c, slightly below consensus sales growth of 11.5% and EPS of 88c. While we believe strong World Cup sales coupled with continued strength in basketball and running footwear supported solid sales growth, intensifying F/X headwinds in emerging markets (e.g., Brazil, Mexico, and Argentina depreciated ~190bps since Q4) likely capped the upside potential. In North America, we believe women's continues to be a driver of incremental growth as key retail partners such as [Dick's Sporting Goods] (DKS) have expanded their square footage allocation to the category. Regionally, Western Europe should generate another solid revenue growth quarter (+24%), but we note comparisons become much tougher next quarter. As for gross margin, our +107bps estimate could prove aggressive as the positive contribution from DTC, product/geography mix (e.g., women's apparel and Europe sales), and ~4% ASP growth will likely be mitigated by F/X pressure and persistent labor/ input costs. NKE continues to gain share; however, at 24x forward estimates (1.5x relative to SPX P/E), there is little room for error, and thus the risk/reward looks balanced.

Sam Poser, Sterne Agee (Buy; $90 PT)

Nike will continue to gain share worldwide due to the ongoing product innovation and massive dollars dedicated to R&D, marketing, and infrastructure. Basketball continues to accelerate in all geographies. Turnaround is well underway in Western Europe and there is progress in China. Multi-year mid-teens EPS growth will be driven by the combination of DTC [direct-to-consumer] growth, systems/production enhancements, and continued share repurchases.

We are forecasting 1Q15 EPS of $0.87 versus $0.86 LY, and a 12.0% revenue increase (on top of +7.7% LY) versus guidance of LDD growth. Based on our checks, Nike and Jordan footwear continue to be strong, driven by marquee basketball and fashion running. We expect GM to increase 75bps, in line with guidance, as higher ASPs, mix shift to higher margins products, and increased DTC penetration are partially offset by increased labor costs and FX. We expect SG&A to grow 22.2% and to delever by 181bps, due to timing of demand creation (spillover of World Cup spending).

Dave Weiner, Deutsche Bank (Buy; $90 PT)

While our core theme on the stock remains that Nike is primarily a gross margin story, we are eyes wide open that the company's impressive revenue profile (includes +ASP & athleisure themes, etc.) is also a key reason why investors like the name. While FY plan already looks for revs. to slow post 1Q, what offsets we believe and keeps us comfortable with the story is Nike's global and omnichannel strategy, which offers ample diversification, and many GM levers including mix shifts (geo., product, & channel), modest promos., & forthcoming manufacturing initiatives.

For F1Q, we remain at $0.88 in EPS, driven by 12% rev. growth, +95bp in y/y GM, and 22% y/y SG&A growth. We believe that this is basically in line with Thomson One consensus and plan (though we're a tad higher on GM). Regarding FY plan, while there is risk from FX & if Running slowed, GM levers remain outsized, which should see FY plan reiterated. Upside possible if manufacturing initiatives are starting to drive COGS reduction benefits.

"We rate NIKE INC (NKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NKE's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NKE has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, NIKE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NIKE INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NIKE INC increased its bottom line by earning $2.98 versus $2.70 in the prior year. This year, the market expects an improvement in earnings ($3.39 versus $2.98).

--Written by Laurie Kulikowski in New York.

Follow @LKulikowski

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.