Why Nike Stock Is Up By 15% Today

Nike Stock Surges After Strong Quarterly Report

Shares of Nike gained strong upside momentum and moved to all-time highs after the company released its quarterly earnings report. Nike reported revenue of $12.3 billion and earnings of $0.93 per share, easily beating analyst estimates on both earnings and revenue.

The company showed strong growth despite recent problems in China. In fact, there was no mention of boycott in China, and it is clear that this recent incident had no material impact on Nike’s business in the country.

Nike’s brand remains very strong, and the company enjoyed gross margin of 45.8% in its fiscal fourth-quarter as Nike’s digital efforts continued to pay off. The company also noted that it repurchased 50 million of its shares for $4.7 billion during the fiscal fourth quarter.

What’s Next For Nike Stock?

The company’s performance is spectacular, and analysts have already rushed to change their estimates. Currently, analysts expect that Nike will report earnings of $3.9 per share in the current fiscal year and $4.59 per share in the following fiscal year, but these estimates will soon be rewritten.

It is obvious that demand for Nike’s products is very strong while the company managed to use the opportunities presented by the pandemic to accelerate its digital transformation, which had a positive effect on margins.

Currently, the stock is trading at about 33 forward P/E which is a reasonable valuation level for the current market environment, especially if we take Nike’s strong growth into account.

The 15% jump in just one trading session is a huge move for the company whose market capitalization exceeds $200 billion, and it remains to be seen whether Nike stock will be able to gain additional upside momentum in the near term or it will face some resistance due to profit taking. In the long-term, Nike remains fundamentally attractive.

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