Just a few months ago, Mr. Market was pulling his hair out over Nike's
And yet, at least to this Fool, it was pretty plain to see that the Nike brand was still strong, future orders were holding up, and it was leveraging its selling and administrative spending. Fast-forward to today and we have the exact opposite reaction to a glowing fiscal-fourth-quarter report and earnings that easily hopped over expectations.
Nike reported fourth-quarter revenue of $5.8 billion, which -- excluding currency changes -- was a gain of 11% over the prior year. Earnings per share jumped 17%, to $1.24. Wall Street was looking for $1.16 in earnings per share on revenue of $5.5 billion.
Looking ahead, demand certainly seems to be holding up for Nike. On a currency-neutral basis, future orders were up 14%, 10%, and 17% for North America, Central and Eastern Europe, and China, respectively. Emerging markets look even stronger for Nike, with future orders up 23%. The only growth holdouts -- Western Europe and Japan -- are not surprising at all as Europe deals with a sluggish economy and a debt crisis, while Japan continues to recover from its devastating disasters.
But what about that inflation?
Commodity cost pressures haven't gone away. The company's gross margin fell and though there were a few factors at play, commodity prices helped push up the cost for things like freight.
But here's the rub for Nike investors: Companies throughout the consumer space have been struggling with rising costs, but Nike is in a very different position than most of them. Companies like Procter & Gamble
As bullish as I've been on Nike's business, I haven't been crazy about the stock because of the price. At roughly 20 times trailing earnings, Nike looks cheap against a close competitor like Under Armour
Of course, that's primarily an issue if you're sitting on the sidelines thinking about buying Nike right now. If you're already an investor, your best bet is probably to sit tight and enjoy owning a very high-quality company.
The Motley Fool owns shares of Under Armour and Clorox. Motley Fool newsletter services have recommended buying shares of Clorox, Nike, Under Armour, and Procter & Gamble. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. 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.
Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.