Foolish Forecast: Nike Ready to Run

Athletic footwear and apparel giant Nike (NYSE: NKE  ) is set to kick off its first fiscal 2008 earnings update tomorrow. Futures orders in June came in at 11%, higher than what analysts were expecting. But it's currently unclear to what extent the company will be Vick-timized by a series of unfortunate events involving a star athlete and endorser of the Air Zoom.  

What analysts say:

• Buy, sell or waffle? Seventeen analysts follow Nike: 12 are bullish on the stock and five are on the fence with hold ratings. The Motley Fool CAPS community has given Nike a favorable four-star rating (out of five stars).
• Revenues. Analysts are projecting $4.6 billion in first-quarter sales, or about 9.3% above last year's sales amount.
• Earnings. Analysts expect quarterly earnings of $0.87, or almost 19% ahead of last year's figure.

What management says:
Management doesn't offer earnings guidance, but in February announced plans to reach $23 billion in annual sales by fiscal 2011, up from $15 billion in 2006. This represents 50% during those five years. And while that implies only high-single-digit annual growth, Nike has a storied history of leveraging this into higher earnings and cash flow generation.

What management does:
Nike did it again last year, even though earnings fell slightly below management's goal of mid-teens annual growth. However, futures orders, which Nike offers to customers to ensure supply needs are met well in advance, came in higher than expected and provide visibility into sales trends for at least the next couple of quarters. Nearer-term, pulling Michael Vick's popular shoe from the market may hurt top-line trends.   

Margins	02/06	05/06	08/06	11/06	02/07	05/07
Gross	44.4%	44.0%	43.8%	43.7%	43.9%	43.9%
Operating	14.5%	14.1%	13.2%	12.8%	12.6%	13.1%
Net	9.6%	9.3%	8.7%	8.7%	8.7%	9.1%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Nike shares have bucked recent market volatility and are up close to 20% so far this year. Besides Germany-based Adidas, Columbia Sportswear (Nasdaq: COLM  ) is perhaps the next closest rival and has only returned 5% year to date. Smaller peers that are more focused on casual footwear are seeing far greater volatility, with shares of Skechers (NYSE: SKX  ) , Steve Madden (Nasdaq: SHOO  ) and Kenneth Cole (NYSE: KCP  ) in the red for 2007.

For related Foolishness:

• Recently, Nike picked up pitchwomen.
• This Fool found a tiger in Nike's Tank.
• Last quarter, Nike won for investors and management.

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