NEW YORK (TheStreet) -- Shares of Nike Inc. (NKE) are up 3.11% to $79.25 in pre-market trade as the sporting goods maker reported fourth quarter profit that beat analysts' estimates as running and basketball gear led sales in North America, Bloomberg reports.
Net income in the quarter ended May 31 jumped 5.4% to $698 million, or 78 cents per share, from $662 million, or 73 cents, a year ago, the company said.
The average of 26 analysts' estimates compiled by Bloomberg was 75 cents.
Total sales were up 11% to $7.43 billion. Analysts, on average, projected $7.34 billion.
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 revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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 14.8%. Since the same quarter one year prior, revenues rose by 12.7%. 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 0.12 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 2.12, 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. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, NIKE INC's return on equity exceeds that of both the industry average and the S&P 500.
- 46.40% is the gross profit margin for NIKE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.82% is above that of the industry average.
- You can view the full analysis from the report here: NKE Ratings Report