Tic-tac-toe, investors want to know: After beating expectations in each of its first two quarterly reports, can Nike
What analysts say:
- Buy, sell, or waffle? Seventeen analysts pace Nike, giving the stock a dozen buy ratings, four holds, and a sell. Our CAPS community rates the company four out of five stars.
- Revenues. On average, they're looking for 11% sales growth to $4.36 billion.
- Earnings. Profits are predicted to sprint ahead 17% to $0.81 per share.
What management says:
The big story in sportswear these days seems to be Under Armour's
What management does:
Although its net margin tripped a bit last quarter, Nike's profit margins have been generally improving over the past year. Operating margins aren't quite up to par with those of UA or Columbia Sportswear
8/06 |
11/06 |
2/07 |
5/07 |
8/07 |
11/07 |
|
---|---|---|---|---|---|---|
Gross |
43.8% |
43.7% |
43.9% |
43.9% |
44.1% |
44.3% |
Operating |
13.2% |
12.8% |
12.6% |
13.1% |
13.3% |
13.2% |
Net |
8.7% |
8.7% |
8.7% |
9.1% |
10.0% |
9.9% |
One Fool says:
One subject that Parker touched on in last quarter's conference call is near and dear to my heart: inventories. Parker observed that Nike continues to "manage down'" its inventory levels. The story here stands in stark contrast to what we've been telling you about UA in quarters past. Whereas Nike's upstart competitor doubled inventories last quarter, Nike held its inventories to just a 2.6% rise, against 13.5% sales growth. Similarly, accounts receivable increased just 10.2%, which was again below the sales growth trend. Why is this important? Because by refusing to tie cash up in unsold goods and uncollected bills, Nike has nearly doubled its free cash flow in the first half of this year, to just under $750 million. Granted, that's still not as good as the net profit numbers that Nike reports, but the trend is moving in the right direction. Let's hope for more of the same on Wednesday.
We've seen where it's going, but where's Nike coming from? Find out in: