Nike (NKE) Stock Up on Earnings, Guidance
Shares of Nike Inc. (NKE) were up +4.76 or +5.89 percent to $85.60 per share in yesterday's after hours trading in the wake of better than expected earnings for the company's fiscal 2015 first quarter ended on August 31st. Nike stock closed at $79.75, down -1.09 or -1.35 percent in Thursday's regular trading session.
Net income for the first quarter came to $962 million versus $779 million or $0.86 in the same period one year ago, an increase of +23 percent. Earnings per diluted share rose +27 percent to $1.09, which reflected a three percent decline in the weighted average of each diluted common share outstanding. Analysts were expecting net income of $0.88. Gross margin increased to 46.6 percent, up 170 bps and was attributed to the company's shift in its product mix focusing on higher margin products with higher prices.
Nike reported a 15 percent increase in revenue to $8.0 billion on both a currency neutral and reported basis, beating analyst expectations by $150 million. The Nike brand showed revenues of $7.4 billion, an increase of 15 percent, while the Converse brand reported revenues of $575 million. The increases were in large part due to market conversions in Asia and Europe and continued growth in markets such as the United States and the UK.
After the earnings report, Nike Chief Executive Officer, Mark Parker said in a conference with analysts that, "The middle class is growing around the world. Interest in sport continues to grow, and consumers are investing more and more in their own health and fitness. Apparel and footwear styles are becoming increasingly athletic. Because we know the consumer better than anyone else, we're able to leverage these developments to accelerate our growth. As a result, we turn trends into real business momentum.
Nike also reported its guidance for second quarter earnings per share to grow in the high teens year on year, which beat the analyst consensus of 12 percent growth and earnings of $0.66 in the second quarter. The company also revised its full year 2015 earnings growth to the high teens after reporting an 18 percent rate of growth in the first quarter. The company's previous guidance was for growth in the high single digits.
Nike stock is already trading at an all-time high after the earnings news. As Nike's prospects continue improving, and with the Chinese market increasing +31 percent in the first quarter, the stock could easily push for the $100 per share handle in the near future.
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