Nike's Winning Ways: Fool by Numbers
By Anders Bylund
December 20, 2007
On Dec. 19, sportswear giant Nike (NYSE: NKE) released second-quarter 2008 earnings for the period ended Nov. 30.
- 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)
|
*Expressed in percentage points.
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 (Nasdaq: CROX)
|
$3.43
|
23
|
**
|
|
Under Armour (NYSE: UA)
|
$2.14
|
46.2
|
***
|
|
Columbia
Sportswear (Nasdaq: COLM)
|
$1.63
|
11.9
|
****
|
|
Nautilus (NYSE: NLS)
|
$.19
|
64.5
|
**
|
Using the latest reported numbers from Yahoo! Finance and Motley Fool CAPS.
Keep your partners close and the competition in your vest pocket.
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