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HenryTo
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Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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 Posted: Fri Sep 23, 2011 11:07 am Post subject: |
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Morningstar on NKE's fiscal 1Q earnings:
http://quicktake.morningstar.com/Stocknet/395319/nikes-1q-stronger-than-expected-shares-offer-stability-in-turbulent-markets.aspx?symbol=NKE
| Quote: | | Nike NKE had a strong kickoff to its fiscal 2012, as the first quarter (ended Aug. 31) came in strong despite mounting consumer spending worries and high expectations for the company. Brand momentum appears to be continuing worldwide, including in the United States, with no apparent impact from the NBA lockout as futures orders in the U.S. were up by the midteens. These effects were largely incorporated in our fiscal 2012 forecast, and after adjusting for first-quarter results, we plan to raise our fair value estimate only minimally. The stock is trading roughly around our fair value estimate, and while we would prefer to buy it at a discount, we view Nike as a wide-moat name that offers investors some stability in these turbulent markets. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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| Posted: Tue Jun 28, 2011 3:42 pm Post subject: |
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Morningstar on Nike's fiscal 4Q earnings:
http://quicktake.morningstar.com/Stocknet/385532/nikes-fiscal-4q-and-full-year-results-strong-on-china-and-north-america.aspx?symbol=NKE
| Quote: | Investors are likely to focus on the futures orders numbers, which were up both broadly and strongly at 15% (12% currency neutral). Futures orders were strong globally (excluding Japan, down 13%, or down 6% excluding currency). In the past few years, the futures orders number has become less predictive of the next quarter's sales, but this rise is certainly a positive, well ahead of last quarter, when futures were up 11%. (Footwear is roughly 90% futures orders while apparel is roughly 60%.) We believe a few percentage points of the acceleration is probably due to price increases starting to make their way through the system, but it will be fall and after the holidays before the scorecard is in on whether price increases affected demand. So far, pricing action appears to be fairly nominal, yet we project incremental increases into calendar 2012.
Another positive indicator of demand and the popularity of the Nike brand, in our opinion, was the direct business, which saw an improvement of 23%, including an 18% improvement in same-store sales and 31% in online sales.
One negative in the quarter was inventories, which were up 33%. We believe most companies are still rebuilding inventories post recession and using inventory and shipping to manage margins, but we also think that before the recession most vendors, including Nike, had too much inventory. Higher inventory prevents missed sales but can lead to additional markdowns and margin pressure down the road if styles start to back up postseason and have to be liquidated. We expect more discussion of the inventory and growth prospects at Nike's annual analyst day Tuesday in Portland, Ore., which we are attending. |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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| Posted: Mon Jun 27, 2011 6:25 pm Post subject: |
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Leave it Nike to blast out the margins fears. Do they even make anything with cotton anymore???? The air shipping....that's another thing. Gotta own that brand as long as the boomers live.
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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| Posted: Fri Mar 18, 2011 5:22 pm Post subject: |
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Morningstar on NKE's 3Q earnings. Note the stock declined 9.16% today to $77.59:
| Quote: | | Nike's NKE fiscal 2011 third-quarter results were in line with our revenue outlook, but fell just short of our profitability expectations. Much of the discussion after the conference call will revolve around management's forecast of an additional 300 basis points of pressure on the gross margin in the fourth quarter, after it declined 110 basis points in the third quarter on input cost pressures and air shipping charges. While rising input costs are a real threat to near-term results, we contend that Nike is one of the few wide-moat stocks in our consumer coverage--based on widespread brand acceptance, economies of scale, and power over suppliers and retailers--and as such should be better able to deal with cost and input pressures than competitors. Our long-term discounted cash flow assumptions for Nike, which assume continued outperformance in China and other emerging markets, remain intact, as does our $82 per share fair value estimate. The shares are trading down sharply on inflation cost concerns, which could provide an opportunistic entry point for long-term investors. |
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WilliamEOS
Newbie
Joined: 03 Jan 2011
Posts: 1
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| Posted: Wed Jan 05, 2011 12:03 pm Post subject: Nike to 100 |
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All signs point toward NIKE reaching the 100 level sometime in 2011. With virtually no debt and plenty of cash on hand, the company is poised to move higher.
Buying the stock here at 84 and selling the April 90 call options for 1.55(covered calls) will be profitable. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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| Posted: Wed Dec 22, 2010 12:12 pm Post subject: |
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Morningstar on NKE's 2Q earnings:
| Quote: | | Nike's NKE report for the second fiscal quarter, ended Nov. 30, increases our expectations for long-term growth and reinforces our thinking that the firm has competitive advantages over other consumer companies--it earns a wide economic moat. We plan to raise our fair value estimate on increases in our long-term growth forecasts for North America, emerging markets, and China. Improvements in long-term operating margins also now appear more probable, despite taking into account some short-term gross margin pressure in the second half of fiscal 2011. Our analysis of the quarter leaves us more encouraged that Nike will expand margins in the long run, and that if gross margin pressures do materialize in 2011, the company will use its competitive advantage in global sourcing, design, and distribution to mitigate those pressures, as it has done in the past two quarters. The gross margin in the reported quarter improved 80 basis points year over year to 45.3%, equal to the improvement reported last quarter. The company had warned of gross margin pressure materializing in the back half of calendar 2010 when it reported its fiscal year ended May. Global demand management, leading to better full-price selling, continues to boost margins. Leverage in selling, general, and administrative expenses, which were flat in dollars year over year, helped drive a better-than-expected 24% increase in reported earnings for the quarter, also encouraging us that our estimates of the cost of demand creation may continue to leverage over the long run. Year-over-year growth was strong across many geographies, leading to 11 % revenue growth for the quarter. Top-line growth was strong in emerging markets (up 24%), North America (up 14%), and China (up 20%). Western Europe and Japan were down 7% and 14%, respectively. Future orders were also up 11%, despite lapping spring orders from the 2010 World Cup, which we view as a strong indication of demand for Nike. We do not view the sequential decline in the futures order book from the all-time high of 13% at the last quarter-end as significantly changing our long-term outlook for the company. While the market may be looking at the 3% rise in futures in Europe as weak, we see it as lapping a tough comparison with the World Cup during an challenging economic environment. Russia was up 40%, which we believe indicates that future strength in Eastern Europe is underappreciated by the market. Eastern Europe was more affected by the global recession than other geographies; sales declined more than 16% in the prior fiscal year. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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| Posted: Thu Mar 18, 2010 10:38 am Post subject: |
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Here is Morningstar's take on Nike:
| Quote: | | Nike NKE continued to outperform its closest rivals during its fiscal third quarter, supporting our thesis that the firm will maintain its market leadership despite increased competitive pressures. As expected, Nike's futures orders accelerated on a sequential basis during the quarter, while stronger-than-expected sales in higher-margin categories led to moderately higher profitability than we had anticipated. We've made a few adjustments to our model for the quarterly results, but they were not enough to have a material impact on our fair value estimate. Third-quarter revenue increased 7% (or 2% excluding favorable currency translation), reversing the negative sales trends of the previous four quarters. More important, futures orders--footwear and apparel orders scheduled to be delivered over the next five months--grew 9% (6% excluding currency), putting the firm ahead of our sales expectations for rivals adidas and Puma. We're confident in our mid-single-digit revenue growth assumptions for fiscal 2011, aided by this summer's World Cup and other sporting event catalysts. We had expected a sharp increase in gross margins this quarter thanks to cleaner inventory positions (down 13% year over year) and lower raw-material costs, but the 300-basis-point improvement to 46.9% modestly exceeded our outlook. Much of this outperformance can be attributed to apparel and direct-to-consumer sales, both of which carry higher margins than wholesale footwear products, which gives us greater confidence in our long-term gross margin assumptions. Selling, general, and administrative costs grew 16% this quarter because of increased demand-creation spending in advance of the World Cup, retail channel investments, and higher performance-based compensation. Though these trends will probably carry into the fourth quarter, we expect operating margins to improve over a longer horizon as a result of expense leverage from a reduced cost infrastructure. |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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| Posted: Thu Mar 18, 2010 9:05 am Post subject: |
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We'll give the sports bubble a pass for a quarter or two. For now the beat goes on:
Nike's a Good Measure of Consumer Health
By Jim Cramer
RealMoney Columnist
3/18/2010 9:56 AM ED
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Nike's (NKE - commentary - Trade Now) really important -- in some ways, more important than FedEx (FDX - commentary - Trade Now). It's a global franchise of footwear you don't need. Wal-Mart (WMT - commentary - Trade Now) has tons of sneakers that look like Nikes, so you don't need to buy Nikes. You don't need to overpay.
But it is happening.
One of the hallmarks of this post-Great Recession moment is that there was pent-up demand galore for what people liked before this decline. The marginal buyer stopped buying. But the buyers didn't change; they just deferred.
I think that Nike's like Best Buy (BBY - commentary - Trade Now) and Nordstrom (JWN - commentary - Trade Now). We wouldn't think that it matters to more than just Nike. But to me it says consumer spending is strong worldwide and getting stronger, and unlike FedEx, it's all frivolous! |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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| Posted: Mon Mar 23, 2009 12:43 pm Post subject: |
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The "Sports Bubble:"
http://www.time.com/time/magazine/article/0,9171,214222,00.html
| Quote: | | Last year, the Swiss-based sports-rights agency ISL collapsed after overpaying for the commercial rights — mainly for broadcasting and sponsorship — to a wide range of sports, including $1.2 billion over 10 years for men's professional tennis. Last month Rupert Murdoch's News Corp. wrote off $909 million on contracts to broadcast such sports as Major League baseball. Murdoch's BSkyB also wrote off the value of its investment in KirchPayTV — to the tune of a whopping $1.4 billion. This week in Britain, broadcaster ITV Digital is expected to conduct frantic talks with the English Football League, to renegotiate a $446 million rights contract that is now threatening the financial health of the strapped service, co-owned by Granada and Carlton. "The market's been plagued by excessive optimism," ... |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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| Posted: Sun Mar 22, 2009 8:32 am Post subject: |
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One of "noble three" trying to save the market last fall is facing its own fuzzy future. The end of the "sports bubble"?
Nike
Published: March 19 2009 15:01 | Last updated: March 19 2009 20:03
Unable to keep outrunning the recession, sportswear behemoth Nike has shown the first impact of the global slowdown in its fourth-quarter sales. These fell by 2.3 per cent. Impairment charges pushed earnings below expectations, and margins slipped slightly from their lofty level. Even so, the numbers still looked surprisingly healthy for a company that sells premium goods to the mass market. Its “futures” growth, however, – the value of pre-sold merchandise – is pointing to a sharper slowdown in coming months, and management has signalled that there will be more margin pressure coming too.
Nike’s great strength has come from cultivation of its brands, masterful logistics and smart cash flow management. Return on invested capital was nearly 25 per cent last year – quite an achievement for a company with net cash and heavy working capital requirements. Even as many of its suppliers and retailers suffer, Nike’s relative dearth of hard assets and the ability to charge premium prices for its products have kept it insulated. The question is for how much longer?
Nike is cutting centralised costs to respond to the slowdown, but its peculiar cost structure leaves it exposed if it needs to start discounting. The procurement cost of a $160 pair of basketball shoes made in China is already small and cannot be pared by much. If consumers start trading down to lesser brands that are a fraction of the cost, Nike will have to choose between lower market share or competing on price alone. Neither is an attractive option.
Of course, Nike has navigated past slowdowns well, but this one is sharper and, as some analysts suggest, comes at what may be the tail end of a decade-long “sports bubble.” With spending on every other aspect of sports from tickets to star salaries slumping, the prospect of customers paying substantially less for an endorsement by Tiger Woods or LeBron James must be truly worrying for Nike’s management.
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