Why Nike Will Move the Dow Tomorrow

The athletic-apparel manufacturer gets a head start on the first-quarter earnings season with its report tomorrow morning. Will Nike keep its growth alive and push the Dow higher?

Mar 20, 2014 at 12:30PM
Longview

The Dow Jones Industrials (DJINDICES:^DJI) bounced back a healthy 113 points as of 12:30 p.m. EDT after a big smackdown yesterday. It got some help from a rise in the Conference Board's Leading Economic Index, which added to the belief that the economy should recover later in the year.

While interest rate policy and macroeconomic conditions will make a huge impact on the long-range trajectory of the market, earnings will also have their say. We're just about to start another earnings season, and Nike (NYSE:NKE) will start things off with its fiscal third-quarter report this afternoon. As one of the higher-growth stocks in the Dow, Nike's results could have a big impact on whether the bull market continues for a sixth straight year or gives way to a bigger correction than we've seen in years.

Nike will issue its earnings release at about 4:15 p.m. EDT. The company will hold a conference call at 5 p.m. EDT to discuss the release and its financial results more broadly.

Nke

Investors expect somewhat mixed results from Nike, with revenue set to rise substantially but earnings per share to drop somewhat. Nevertheless, investors fully believe that this quarter's potential decline in earnings will be a short-term phenomenon, with solid growth seen for the full year.

So far, Nike has done an admirable job of earning its place in the Dow Jones Industrials since joining last fall. The company has fended off challenges from key rivals, avoiding the painful miscues that have hurt up-and-coming yoga-retail specialist lululemon athletica (NASDAQ:LULU) all year and retaining its stranglehold over Under Armour (NYSE:UA), Adidas, and other competitors at the top end of the endorsement spectrum. That dominance has given Nike a big marketing edge, which in turn drives profit margins that are an essential part of Nike's long-term potential.

What could really move Nike is its focus this year on soccer. With a major sponsorship of the 2014 World Cup in Brazil, Nike's exposure among soccer players and fans will never be higher. If the company can capitalize on that opportunity, it could deal Adidas a particularly tough blow, given the German multinational's traditional strength in soccer footwear. With the popularity of the sport worldwide, carryover interest could raise interest in Nike's other products as well.

Nike will move the Dow tomorrow not just because of its own particular read on the economy but also as a key measure of whether investors still favor solid growth stocks. As the bull market ages, there might come a time when growth gives way to more defensive plays. For now, though, Nike is performing strongly and could continue to see gains on a solid report.

Get growth in your portfolio
Finding great growth stocks is so hard that many said it simply couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers