Nike Wins Again: Fool by Numbers
By Anders Bylund
September 21, 2007
Recommended (3)
On Sept. 20, sporting goods giant Nike (NYSE: NKE) released 2008 earnings for the first quarter ended Aug. 31.
- Despite tepid sales growth in the core U.S. market -- or shrinkage in some product categories -- Nike pulled out a strong overall performance thanks to results in the rest of the world. Europe, the Middle East, and Africa improved by 16% over last year's comparable period, and the Asia Pacific region vaulted to 22% higher revenue.
- Net income was helped by a one-time tax benefit that shaved off $0.20 per share in payments to the tax collector. On a before-tax basis, earnings improved by a more modest 16% over last year.
- That balance sheet looks mighty strong and gives the company the fiscal freedom to keep raising its dividend payout and buying back shares.
- With financial performances like these, it's no wonder why Adidas felt the need to boost its business with that Reebok acquisition -- to the immediate joy but long-term consternation of Motley Fool Stock Advisor subscribers (Reebok was a recommendation).
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2008
|
Q1 2007
|
Change
|
|
Sales
|
$4,655
|
$4,194
|
11.0%
|
|
Net Profit
|
$570
|
$377
|
51.0%
|
|
EPS
|
$1.12
|
$0.74
|
51.4%
|
|
Diluted Shares
|
507.3
|
512.0
|
(0.9%)
|
Get back to basics with the income statement.
Margin Checkup
|
Q1 2008
|
Q1 2007
|
Change*
|
|
Gross Margin
|
44.8%
|
44.1%
|
0.7
|
|
Operating Margin
|
14.0%
|
13.3%
|
0.7
|
|
Net Margin
|
12.2%
|
9.0%
|
3.3
|
*Expressed in percentage points
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q1 2008
|
Q1 2007
|
Change
|
|
Cash + ST Invest.
|
$2,791
|
$1,725
|
61.9%
|
|
Accounts Rec.
|
$2,774
|
$2,557
|
8.5%
|
|
Inventory
|
$2,155
|
$2,134
|
1.0%
|
|
Liabilities
|
Q1 2008
|
Q1 2007
|
Change
|
|
Accounts Payable
|
$972
|
$868
|
12.0%
|
|
Long-Term Debt
|
$421
|
$380
|
10.6%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Free Cash Flow
|
$227
|
$154
|
47.4%
|
Free cash flow is a Fool's best friend. Nike only gave us a tiny part of it today, and you had to tune in to its conference call for even that much.
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