What happened

Shares of Nike (NYSE:NKE) gained 10.4% in value last month, according to data provided by S&P Global Market Intelligence. To be clear, there wasn't any company-specific news last month. Instead, Nike's strong earnings report in late December, along with the rebound in the broader market, helped send the shares higher in January. One analyst issued a positive report on Nike last month, which likely supported the stock performance as well. 

So what

Nike has made a comeback over the last year after losing market share to rival Adidas. According to Nike's fiscal second-quarter earnings report, sales of footwear rose 15% year over year on a constant currency basis, which drove growth in total revenue of 14%. 

Nike basketball shoe

Nike Air Jordan 11 Concord. IMAGE SOURCE: NIKE.

The swoosh brand has been rolling out new sneaker styles at a blistering pace lately. The fast cadence of new releases is a result of management's strategy to double-down on speed in innovation and getting new products to market as quickly as possible. 

Now what

Investors have taken notice of the improvement. Nike stock is up 22% over the last year, beating the S&P 500, which is down about 1%. One analyst with Cowen upgraded Nike shares to outperform citing the momentum in online sales and product innovation. 

Management sees a significant growth opportunity in apparel. Footwear makes up two-thirds of annual revenue, but apparel has generally grown faster for Nike over the last year. Nike's biggest apparel category is sportswear, in which sales increased 20% year over year in the previous quarter. 

Analysts expect Nike to grow revenue by 7.8% in fiscal 2019 (which ends in May). This should translate to $2.65 per share in earnings, representing an increase of 11% year over year. Analysts currently estimate Nike will grow earnings 14% per year over the next five years, while the stock currently trades for a forward price-to-earnings ratio of 26. 

John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Nike. The Motley Fool has a disclosure policy.