Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . 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, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- NKE's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 5.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NKE's debt-to-equity ratio is very low at 0.03 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 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
- NIKE INC has improved earnings per share by 21.7% in the most recent quarter compared to the same quarter a year ago. 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 $2.39 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus $2.39).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 54.6% when compared to the same quarter one year prior, rising from $560.00 million to $866.00 million.
- 44.20% is the gross profit margin for NIKE INC which we consider to be strong. Regardless of NKE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NKE's net profit margin of 13.99% compares favorably to the industry average.
NIKE, Inc., together with its subsidiaries, engages in the design, development, marketing, and sale of footwear, apparel, equipment, and accessories for men, women, and children worldwide. Nike has a market cap of $42.62 billion and is part of the consumer goods sector and consumer non-durables industry. The company has a P/E ratio of 12.3, below the S&P 500 P/E ratio of 17.7. Shares are up 15.4% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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