The earnings calendar remains light for next week, allowing investors to closely monitor shoe giant Nike’s earnings that will be announced on Thursday afternoon, amid rising a rising stock price and store reopenings.
Nike’s business in China is critical to the manufacturer’s performance as its e-commerce business managed to offset some of the company’s performance during the global pandemic. Many analysts expect Nike to report earnings of 3 cents per share on $8.35bn in revenue during its fourth quarter.
“Nike’s advantages include innovation fueled momentum entering the pandemic, strategic investments in digital capabilities/app ecosystem, and balance sheet strength,” analyst Jim Duffy writes. “We see Nike shares as favorably positioned for both secular fitness/casualization trends and industry structural changes that benefit those with strong direct engagement with consumers.”
Nike’s fiscal third-quarter sales came in above estimates, but earnings fell short as a result of the pandemic. Many expect that Nike will emerge as one of the retail winners from the crisis as a result of its strong online presence.
Nike’s revenue jumped 5% last quarter, with digital sales up 36%. Although these results don’t include any coronavirus impact outside of China, the Zacks estimates call for Nike’s fourth quarter revenue to tumble 23% from the year-ago period to come in at $7.84bn.
Although Nike shares are down more than 5% this year, the company’s increasingly higher margins, profits, and growth justify a high valuation, say some brokers.