Tennis legend John McEnroe and basketball icon Michael Jordan put sports shoe maker Nike on the map in the early 1980s. Ever since then, it’s been up, up and away for what’s now the world’s largest sporting-goods company.
Nike is the dominant player in a growing industry. Its apparel and shoe products clothe everyone from pro athletes to weekend warriors. Those products also have proven popular with non-athletes who consider themselves fashion mavens. The company is as big on style as substance.
Nike’s stellar performance has made its stock an appealing investment to consider.
The company’s profit rose 5 percent to $523 million in the quarter ended Feb. 28 from $497 million a year earlier. Revenue gained 7.3 percent to $5.08 billion. Sales in North America, Nike's largest market, rose 9 percent to $1.84 billion.
"Our solid third-quarter results demonstrate the power of the NIKE portfolio," CEO Mark Parker said in a statement. "Our unique ability to create deep connections with consumers, led by an impressive pipeline of innovative product and exciting retail experiences, continues to strengthen our brands and accelerate growth.”
The coming months also are likely to provide solid earnings, as Nike’s advance orders for the following five months (March to July) climbed 9 percent to $7.9 billion, excluding currency fluctuations. Orders increased 11 percent for North America, 18 percent for emerging markets, and 13 percent for greater China.
The strength in orders combined with vigilant cost-cutting efforts should push profit margins higher. And Nike’s tremendous efforts at innovation will likely continue to provide popular new products in coming years. The fact that Nike’s products are used by the world’s top athletes brings instant credibility to its new offerings.
The company also has more than doubled its dividend payout over the past three years.
Standard & Poor’s analyst Marie Driscoll has a four-star buy rating on Nike’s stock. “We see strong fundamentals and a dominant global brand with exceptional international growth opportunities supporting the share price,” she writes.
“We expect NKE to pick up market share in most product categories as consumers tend to opt for established brands in uncertain environments.”
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