On Dec. 19, sportswear giant Nike
- If there is one nit to pick with these results, it would be this: Earnings growth isn't keeping up with sales growth, so the margins are getting slimmer.
- On the other hand, free cash flow now outstrips net income, just the way Fools like it.
- Nike has few true rivals in the sportswear market. German powerhouse adidas AG (OTC BB: ADDYY.PK) is a four-star CAPS stock, with a 97% approval rating versus Nike's 93% -- but it's an illiquid Pink Sheets issue here in the States.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q2 2008 |
Q2 2007 |
Change |
|
|---|---|---|---|
|
Sales |
$4,340 |
$3,822 |
13.5% |
|
Net Profit |
$359 |
$326 |
10.4% |
|
EPS |
$0.71 |
$0.64 |
10.9% |
|
Diluted Shares |
506.2 |
507.3 |
(0.2%) |
Get back to basics with the income statement.
Margin Checkup
|
Q2 2008 |
Q2 2007 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
44.3% |
43.4% |
0.9 |
|
Operating Margin |
11.3% |
11.3% |
(0.0) |
|
Net Margin |
8.3% |
8.5% |
(0.2) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q2 2008 |
Q2 2007 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$3,072 |
$1,907 |
61.0% |
|
Accounts Rec. |
$2,617 |
$2,376 |
10.2% |
|
Inventory |
$2,224 |
$2,167 |
2.6% |
|
Liabilities |
Q2 2008 |
Q2 2007 |
Change |
|---|---|---|---|
|
Accounts Payable |
$1,054 |
$880 |
19.7% |
|
Long-Term Debt |
$436 |
$384 |
13.8% |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q2 2008 |
Q2 2007 |
Change |
|
|---|---|---|---|
|
Free Cash Flow |
$511 |
$227 |
125.1% |
Free cash flow is a Fool's best friend, even when we only have one part of the equation.
Competitive Context
|
Market Cap (billions) |
Trailing P/E Ratio |
CAPS Rating |
|
|---|---|---|---|
|
Nike |
$33.17 |
20.09 |
**** |
|
Crocs |
$3.43 |
23 |
** |
|
Under Armour |
$2.14 |
46.2 |
*** |
|
Columbia
Sportswear |
$1.63 |
11.9 |
**** |
|
Nautilus |
$.19 |
64.5 |
** |
Keep your partners close and the competition in your vest pocket.
Related Foolishness:
- Dueling Fools: Crocs
- Under Armour's Taxing Quarter
- Why Real Men Can't Make Money in the Market
- Foolish Fundamentals: Inventory
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