Nike (NKE – Analyst Report) shares are down about 4.3% since it reported mixed earnings on March 22. The premier athletic brand posted earnings of $0.55 per share, beating our EPS consensus of $0.48. However, the company missed on our revenues consensus of $8.2 billion, posting sales of just $8.03 billion for the quarter.
Results like these could give investors mixed signals as to whether they should be buying or selling shares right now. The company’s stock has been rebounding today, but so has the broader market.
Nike has a lot of strengths, but there are also a few glaring weaknesses for the company which could impact its share price in the short term. Let’s take a look at the most important ones—and what investors need to know about NKE stock—below:
Strengths
NKE has the potential to cushion your portfolio from the market’s volatility, as it has a beta of just 0.61. It’s also worth noting that the company currently doles out a 1% dividend yield.
Nike’s cash dividend has grown by 52% since the beginning of 2013.With this, I see some potential in Nike to become an attractive income stock over time. If you buy the stock now, and the cash distributed to investors continues to increase over time, Nike shareholders could receive a nice dividend yield over the long run.
There were some numbers from Nike’s recent earnings release which point out growth in demand for its products. The athletic retailer saw growth in its foreign presence, with China sales growing by 23% over the last quarter; earnings from Japan also grew by over 60% in the third quarter. These numbers were lead by growth in footwear sales across both of these countries. It should be noted that future orders for Nike’s next quarter surpassed investor expectations, with 17% futures growth after excluding currency changes.
Nike’s got some great fundamental growth metrics backing it up. The company’s EPS is projected to grow by 15.68% this year. The company also has a net margin of 11.84%, which is ahead of the industry’s average net margin of 5.63%.NKE is not too leveraged either, as the company’s debt to capital is just 14.27%.
