Nike Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Nike (NYSE: NKE  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Nike has been a pioneer in athletic footwear and apparel for a long time, leading the industry since its infancy to become a massive global brand. Yet the top dog faces plenty of competition from hungry rivals aiming to displace the athletic giant. Let's take an early look at what's been happening with Nike over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Nike

 

 

Analyst EPS Estimate

$0.67

Change From Year-Ago EPS

11.7%

Revenue Estimate

$6.23 billion

Change From Year-Ago Revenue

6.6%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Nike run faster this quarter?
Over the past few months, analysts have had mixed views on Nike. For the just-ended quarter, they've cut their earnings-per-share estimates by $0.03, but they've added $0.02 per share to their fiscal 2013 calls. The stock, meanwhile, has reflected more optimism, rising 11% since mid-December.

Nike has done a masterful job of building its brand up and leveraging its power to make smart partnerships with sports leagues and endorsement ambassadors. Recognizing the high value of intangibles in the industry, moves such as signing top-ranked golfer Rory McIlroy to its endorsement roster have become part and parcel of the Nike success story.

But Nike has had to react to competition. Under Armour (NYSE: UA  ) has made a big move into the athletic shoe business, and given its past success in building a niche in the athletic apparel segment, Under Armour will pose a credible threat to Nike. A lawsuit that Under Armour recently filed against Nike for trademark infringement indicates just how much is at stake for both parties.

One area where Nike stands to gain is in technology. Its FuelBand monitoring device has the potential to become an entry point that could inspire future products from a partnership with Apple, which could eventually lead to a "smart-shoe" system or an iWatch, especially since Tim Cook serves on the Nike board.

Just last month, Nike completed the sale of its Cole Haan shoe brand to a private equity firm for $570 million. The sale emphasizes Nike's renewed focus on its core athletic business, and the cash should give it flexibility to take other steps to increase profitability.

In Nike's quarterly report, look for signs that point to which strategic direction the company is planning to go. With so many irons in the fire, the danger is in trying to do too much, but Nike's new focus should serve it well even as competition heats up.

A Nike-Apple partnership holds lots of promise, but Apple has struggled so much lately that some investors wonder whether Apple remains a buy. Eric Bleeker, The Motley Fool's senior technology analyst and managing bureau chief, has prepared a premium research report with his views on reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Click here to add Nike to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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