Shares of the global sport equipment and apparel retailer, Nike Inc. (NKE), soared to a new 52-week high of $80.14 on Monday, Dec 2. This Zacks Rank #2 (Buy) company closed trade at $79.09, representing a solid year-to-date return of 52.6%. Average volume of shares traded over the last 3 months stands at approximately 4,010K.
Moreover, the company currently trades at a forward P/E of 25.9x, an 19.3% premium to the peer group average of 21.7x.
A sustained focus on brand building, innovation and operation expansion initiatives in the emerging markets were the major drivers behind the stock’s strong price appreciation. Additionally, the shares of Nike have been gaining from an impressive record of beating the quarterly earnings expectations and an upbeat guidance.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Nike’s strong portfolio of globally recognized brands – such as Nike, Converse, Chuck Taylor, Hurley, All Star, One Star, Star Chevron, and Jack Purcell – and its focus on innovation have helped strengthen its leadership position.
After being tagged as a product innovator in the industry, Nike has gone a step ahead in extending the scope of its innovation mantra into manufacturing with the opening of a new water-free dyeing facility that uses state-of-the-art equipment for reducing the water and chemicals component in coloring clothes. For this, the company has collaborated with Taiwan-based Far Eastern New Century Corp. and Netherlands-based DyeCoo, and developed a new dyeing process called “ColorDry”.
On the other hand, Nike is striving for opportunities to expand its global footprint and increase its market share by acquiring new brands, developing its direct-to-customer business and divesting underperforming brands. Collectively, these strategies position the company well among competitors such as Adidas AG and Brown Shoe Co. Inc. (BWS).
Moreover, the shares of this footwear and athletic apparel retailer have been displaying consistent growth based on the company’s track record of outperforming the Zacks Consensus Estimate in the trailing 5 quarters with an average beat of 9.9%. In first-quarter 2014, it posted a positive earnings surprise of 10.3%, aided by healthy top-line growth and improved margins. Further, the company’s impressive guidance for fiscal 2014 indicates sustained growth that impresses yield-seeking investors.
For fiscal 2014, the company anticipates revenue growth to be in the high single-digit range, while gross margin is projected to expand by 50 basis points (bps) on a year-over-year basis. Additionally, we remain assured of the company’s top-line growth, given the rise in future orders.