Updated from 5:11 p.m. ET with conference call details.
Shares of the footwear and apparel giant rose as much as 4% in after-market trading Tuesday as fiscal second-quarter earnings came in at 50 cents a share, besting Wall Street estimates for 43 cents a share. Net sales rose 6% from the prior year to $8.2 billion. Analysts had expected sales of $8.09 billion.
On a conference call, Nike said its basketball sneaker business was "back" after seeing a bout of slowing sales in recent quarters due to a consumer shift toward more casual shoes and greater competition from Under Armour (UA) - Get Report . The company highlighted several new styles within its top basketball brands such as Kyrie Irving, LeBron James and Kobe Bryant as particular strong sellers.
The sales job to analysts didn't stop there, however. Nike teased further releases of its popular new self-tying sneakers, maintained that it was finally getting a handle on cleaning up the excess inventory that has weighed on profit, and mentioned it has enjoyed a great holiday season.
But Nike's quarter and general commentary may not signal the the comeback the bulls have been waiting to receive for several reasons.
First, Nike's bottom line during the quarter was boosted heavily by share buybacks. The company reduced the number of shares outstanding by 3% from a year ago by plunking down $900 million to buyback stock.
Second, Nike's sales in all three of its product categories of footwear, apparel and equipment in its largest market of North America showed slower growth rates compared to the first quarter.
That factor could feed the bear case, which has hammered Nike's stock this year to the tune of about 18%. It's one that's rooted in the reality that rivals Adidas (ADDYY) and Under Armour are stealing business -- especially in the lucrative basketball sneaker area -- from Nike in all sorts of categories. That has created doubt among investors on whether Nike still deserves to trade on the lofty price-to-earnings multiple it does.
"Overall, we remain cautious near term on the stock given, in part, due to strong competition and a shift to lifestyle products," points out Deutsche Bank analyst Dave Weiner.
And finally, Nike's closely watched futures orders number -- which offers insight into demand by major retailers -- came up light. Excluding the impact of the strong U.S. dollar, Nike's futures orders increased by 2% for the second quarter ended Nov. 30, below Wall Street estimates for 5.3% growth.