Nike Stock Price Gains Much Needed Support From Financials

Although Nike (NYSE: NKE) stock price rose close to 10% year to date, the stock has not been responding according to expectations. Fortunately, the company’s robust financial and operational performance in the first quarter would help in strengthening the bullish trend.

Nike stock price is currently trading around 52-weeks high of $90 a share. The majority of market pundits expect its stock to cross $100 level in the coming days.

NKE NIKE, Inc. daily Stock Chart

The company has topped revenue and earnings estimates for the first quarter by $230 million and $0.15 per share. Its revenue of $10.66 billion increased 7% from the past year period.

Indeed, Nike shined across all categories and geographic regions. Its apparel sales rose 6% while footwear sales jumped 8% from the previous year period.

The North America revenue enlarged 3.6% and EMEA revenue grew 6.4% year over year. Revenue from the greater China surged 22% year over year to $1.68B in Q1.

Its CEO said,“Our strong start to FY20 highlighted the depth and balance of NIKE’s complete offense.

The CEO claims that strong product innovation continues to enhance customers sentiments. In addition, its industry-leading digital experiences added to revenue growth.

Strong support from margins and focus on share buybacks permitted the company to convert single-digit revenue growth into big profits. Its gross margin grew to 45.7% of sales compared to 44.2% a year ago.

Consequently, the company generated earnings per share growth of 28% to $0.86 per share.

Nike has bought 11.9 million shares for $995 million. The company had announced a share buyback plan of $15 billion in June 2018. It has repurchased 23.5 million shares under this program for approximately $2.0 billion.

The company is seeking to make strategic investments in digital transformation along with extending its competitive advantage.

Overall, strong financial numbers for the first quarter combined with its focus on share buybacks would offer support to bullish sentiments. Nike stock price is poised to cross $100 mark amid its strategy of accelerating digital transformation and investments in high margin products.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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