Nike (NYSE: NKE) stock price has been trading in a range of $80 over the last six months. The range-bound movement is due to traders concerns over increasing tariffs. Besides from currency conversion and trade war headwinds, Nike appears in a strong position to support the share price movement.
Guggenheim has set a price target of $100 for Nike stock. The analyst claims that the depressed share price performance is presenting a buying opportunity. The firm identified its strong recent financial results, supply chain improvements and the focus on DTC/digital as catalysts for stock price performance.
Nike has generated strong results for the final quarter and fiscal 2019. Its Q4 revenue grew 10% year over year to $10.4 billion. Full-year revenue rose 11% from the previous year. The strategic investments in innovations along with the focus on digital sales helped in generating double-digit revenue growth.
Andy Campion, Executive Vice President and CFO, NIKE, Inc said, “Amid foreign exchange volatility, our double-digit currency-neutral revenue growth and expanding ROIC showcase NIKE’s unrivaled ability to create extraordinary value for consumers and shareholders over the long term.”
It has successfully been translating higher revenues into big profits. The company has generated earnings per share of $2.49 per share in fiscal 2019 compared earnings of $1.17 per share in the previous year. Revenue growth, widening margins and lower share count added to its earnings growth in fiscal 2019.
The company has repurchased almost $4.5 billion of common stock since June 2018. It plans to repurchase $11 billion of outstanding shares in the next three years.
The decline in the number of outstanding shares is likely to offer significant support to its share price and earnings performance. Its dividends are also safe considering the cash generation potential. It had generated $4.78 billion in free cash flows in 2019 – which is more than enough to cover dividend payments of $1.3 billion. On the whole, Nike stock price is well set to hit new 52-weeks high in the coming days.
