Will Nike (NKE) Stock Get An Assist From Soccer?

NEW YORK (TheStreet) -- Nike, Inc.  (NKE), battling Adidas AG (ADDYY) to be the world's major soccer brand, expects kit sales to keep growing quickly after the World Cup concludes, Reuters reports.

In June, Nike reported soccer-related revenue was up 21%, excluding currency fluctuations, to $2.3 billion in the financial year ended May 31.

"I promise you it will continue like that in the next year," CEO Mark Parker told Germany's Handelsblatt daily, adding that the $2.3 billion did not include "a few hundred million dollars" from soccer lifestyle products such as football-themed tops.

Shares of Nike are currently down -1.25% to $77.67.

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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 solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • NKE's revenue growth has slightly outpaced the industry average of 8.4%. 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.
  • You can view the full analysis from the report here: NKE Ratings Report

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