NEW YORK (TheStreet) -- Nike (NKE) - Get Report shares closed trading up 1.3% to $111.29 on Tuesday after signing a new deal to be the exclusive apparel supplier to the University of Michigan athletic teams.
The deal is set to begin in August of next year and run until 2027 with an option for Nike to extend the contract to 2031.
Nike takes over the supply contract for the high profile college athletics program from Adidas (ADDYY) , which took over as the apparel supplier for the university from Nike in 2008.
"Obviously we're very disappointed that Michigan didn't choose us, but we can probably sign four or five really wonderful schools as we go forward," said Adidas North America President Mark King, according to the Wall Street Journal.
Nike shares are also experiencing gains due to the exposure its apparel received during the Women's World Cup as Nike outfitted the U.S. team won the tournament this weekend.
TheStreet Ratings team rates NIKE INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"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 solid stock price performance, impressive record of earnings per share growth, compelling growth 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:
- Powered by its strong earnings growth of 25.64% and other important driving factors, this stock has surged by 40.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NKE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- NIKE INC has improved earnings per share by 25.6% 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 $3.70 versus $2.98 in the prior year. This year, the market expects an improvement in earnings ($4.18 versus $3.70).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 23.9% when compared to the same quarter one year prior, going from $698.00 million to $865.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 4.8%. 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 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: NKE Ratings Report