Stock of the day 23/06/2015 –Nike Inc

Will Nike continue its record-breaking run, or end up flat footed, when it announces its Q4 2015 earnings release on Thursday?

Since its last stock split in December 2012, taking its price from $101.50 to $51.34, Nike has been consistently ascendant in the past 2 and a half years. After growing from $78.50 to $96.12 across 2014, Nike has seen a similar run in 2015. It began the year at $96.58, and after briefly touching a low of $90.71 at the start of February has seen near-uninterrupted gains. In fact, factor in the stock splits and Nike is currently trading at an all-time high of $106.81 (23/06/2015, IT-Finance.com).


(Source: IT-Finance.com 23/06/2015)

Its third quarter results in March led to the initial setting of the aforementioned all-time highs following a 2% increase in future orders, a figure that leapt to 11% when the effects of that pesky stronger dollar were removed. This was joined by a 19% jump in earnings per share to $0.89 alongside 7% growth in revenue to $7.5 billion, something that would have been a 13% increase if it wasn’t for the gruesome greenback.

The dollar is like to be Nike’s bogeyman once again this quarter, but not with the same tenacity that was felt in the company’s third quarter results with the greenback appreciating only 2% since March compared to the 8-9% estimates Nike had factored in to its guidance. Analysts are expecting earnings per share of $0.83, compared to $0.78 year-on-year, with an increase in revenue from $7.42 billion to $7.68 billion. However this dollar headwind will still cause Nike to post 3% sales growth instead of the 11-12% growth it would have posted without the impact of the stronger US currency.

Beyond its earnings, Nike has secured a deal with the NBA, WNBA and NBA D-League to be the official on-court apparel provider, beginning in 2017-18, a deal that is reportedly worth $1 billion and is similar to Nike’s arrangement with the NFL. On top of this traditional avenue of growth, Nike is finding new ways to keep its brand fresh; its most recent innovation is NIKEiD, a service that allows the customer to, well, customise their clothing on the company’s website.

This mixture of strong earnings, product innovation and landmark sports deals has left Nike with a consensus rating of ‘buy’ and an average target price of $107.07.

Tuesday’s stock news:

In the latest M&A move in the gambling sector, Ladbrokes confirmed this morning that it is in talks with Gala Coral (of, unsurprisingly, Gala Bingo and Coral fame) for a potential merger. Following all the Bwin talk of the last few weeks, and the interest from Playtech for Plus500, 2015 has been another busy year for the sector. This news helped push Ladbrokes higher by around 10% to a fresh 9 month high.

It was definitely Telecom Plus, not Telecom Negative, this Tuesday morning, as the utility company posted a 21.3% increase in full-year pre-tax profit to £42.1 million alongside a 10.5% rise in revenue. This saw the company jump 3.5% after the bell to its highest price since the end of May, following a difficult 2015 that has seen Telecom Plus fall from £12.69 at the start of January to a current price of £8.50.