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Why Micron and Nike Are Rising After Hours

By Dan Caplinger – Dec 20, 2021 at 12:57PM

Key Points

  • Markets were broadly lower on Monday.
  • After the closing bell, though, Micron and Nike scored sizable gains.
  • Both stocks are taking advantage of current industry conditions while finding ways to get through their respective challenges.

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Markets were lower during the day, but these two companies reported their latest earnings results.

The stock market lost ground on Monday, with investors responding negatively to ongoing worries about the omicron COVID-19 variant, as well as news over the weekend that the Build Back Better spending bill in Washington D.C. was unlikely to move forward in its current form. The Dow Jones Industrial Average (^DJI 1.26%), S&P 500 (^GSPC 1.44%), and Nasdaq Composite (^IXIC 1.74%) didn't finish at their worst levels of the day, but all three nevertheless fell by more than 1%.


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Data source: Yahoo! Finance.

After the closing bell, a couple of stocks that have a substantial following within the investing community reported their latest quarterly results. Both Micron Technology (MU -4.36%) and Nike (NKE 2.12%) gained ground in after-hours trading  as investors seemed generally comfortable with the reports. Below, we'll go into more detail about what these two companies said and how it could affect investor sentiment on Tuesday.

Micron has a good memory

Shares of Micron Technology were up nearly 7% in after-hours trading as of 4:45 p.m. EST. The memory chip specialist reported strong results for its fiscal first quarter, and its outlook suggested that Micron could see record sales and solid profits throughout the fiscal year.

Person wearing mask and glove looking at a semiconductor chip.

Image source: Getty Images.

Micron's numbers were impressive. Revenue jumped 33% year over year to $7.69 billion, although that was down somewhat from the $8.27 billion that Micron brought in during the fiscal fourth quarter three months ago. Adjusted net income came close to tripling from year-ago levels to $2.31 billion, and that produced adjusted earnings of $2.16 per share, topping expectations.

CEO Sanjay Mehrotra pointed to several powerful trends helping Micron. 5G wireless network technology, artificial intelligence, and electric vehicle adoption are all driving demand for Micron's chips, and none of those trends seem likely to slow down anytime in the near future.

Micron expects fiscal second-quarter results to be reasonably good, with sales likely to be between $7.3 billion and $7.7 billion and adjusted earnings of $1.85 to $2.05 per share. That was enough to satisfy shareholders, and if Micron can top those expectations yet again, it could leave more room for the stock to rise.

Nike does it

Nike shares were up more than 3% in after-hours trading. The athletic shoe and apparel giant's fiscal second-quarter financial report had some good news for longtime investors in the stock.

At first glance, Nike's numbers didn't seem all that impressive. Revenue of $11.4 billion was up just 1% from prior-year levels, and flat on a currency-adjusted basis. Gross margin rose almost three percentage points to 45.9%, and Nike Direct sales climbed 9% year over year on a 40% rise in North American digital sales. However, earnings of $0.83 per share were up just 6% from year-ago levels.

Nike pointed to continuing difficulties operationally, including the ongoing effect of supply chain challenges. Results in the Greater China and Asia-Pacific and Latin America segments were poor, with low inventories due to pandemic-related factory closures. Higher wages contributed to an 8% rise in overhead expense, and Nike boosted its brand campaign and digital marketing spending enough to push selling and administrative costs higher by 15% year over year.

All in all, Nike has handled pandemic-related challenges well, and investors seem to be applauding that fact. That doesn't mean things will get easier for Nike in the immediate future, but the company has confidence it can overcome its obstacles and perform well in the long run.

Dan Caplinger owns Nike. The Motley Fool owns and recommends Nike. The Motley Fool has a disclosure policy.

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