Nike Inc (NKE) Q3 Earnings Preview: Solid Revenue Growth Coming

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Nike Inc (NYSE:NKE) is set to report its fiscal third quarter 2014 results on Thursday, March 20 at 4:00 p.m. EDT. Expectations are high for the Beaverton, Oregon-based company as investors will be watching the results from China and Europe closely. Wall Street consensus estimates Nike’s bottom line to decline for the first time in more than a year.

Citi expects a 14.5% growth in Nike’s Q3 revenue

Analysts polled by Thomson Reuters expect Nike Inc (NYSE:NKE)’s Q3 revenues to jump 10.3% to $6.70. Analysts forecast its earnings to decline to $0.72 per share from $0.73 in the corresponding period last year. The consensus EPS estimate remains unchanged over the past 60 days. Nike has easily topped EPS estimates in recent quarters.

However, Citi Research analyst Kate McShane is optimistic about the company’s earnings. She expects Nike Inc (NYSE:NKE)’s earnings to come at $0.79 a share, much higher than the Wall Street consensus of $0.72. Citi Research estimates the company’s revenues to grow 14.5%, helped by strong growth in the U.S., Europe and China. The revenue growth will be partially offset by forex-related declines in Japan. McShane expects Nike’s gross margins to rise by 70 basis points YoY to 44.9%. Wall Street consensus estimates the company’s gross margins to improve by 40 basis points.

15 of 27 investors have a ‘Buy’ rating on Nike

Nike Inc (NYSE:NKE)’s updated guidance in December was better than the company’s own previous guidance in September. Despite the cost and forex headwinds, the company continues to return money to shareholders through increased dividend. Nike has also spent more than $900 million on stock buybacks. The sports apparel maker’s dividend yield stands at 1.21%.

Of 27 analysts polled by Thomson Reuters who follow the stock, 15 have a Buy rating on Nike Inc (NYSE:NKE). And five of them rate the stock as a Strong Buy. For the current quarter, analysts expect sequential and YoY growth in revenue as well as EPS. Analysts forecast full year revenues to jump 9%, and EPS to surge 10%.

Nike Inc (NYSE:NKE) shares were little changed in pre-market trading Thursday at $79.13

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