NEW YORK (TheStreet) -- Shares of Nike Inc (NKE) are lower by 0.16% to $94.45 in early market trading Friday, after the world's largest sporting goods maker had coverage initiated with a "market perform" rating by analysts at FBR Capital this morning.
FBR Capital analysts set a $94 price target on its shares.
Separately, analysts at Janney Capital said athletic footwear stocks including Nike could come under pressure, citing adverse SportScan data, according to Bloomberg.
The report shows athletic footwear sales fell in the week ended November 1 by 6.5% from last year, compared to a 20.6% increase in the previous year.
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, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
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 14.7%. Since the same quarter one year prior, revenues rose by 14.5%. 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 0.12 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 1.70, 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.
- 48.46% 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 12.05% is above that of the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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