Nike Q2 Earnings and Revenues Top Estimates

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Nike (NKE) delivered better-than-expected Fiscal Q2 2022 results as it navigated a dynamic environment. Quarterly revenues and earnings topped consensus estimates, benefiting from strong consumer connections and the continued strength of brands. NKE shares fell 2.71% to close at $156.98 on December 20.

Nike is a U.S. company that designs, manufactures, and sells athletic footwear, apparel, accessories, and equipment. It also deals in athletic lifestyle sneakers, apparel, and accessories under the Converse line.

Q2 Results

Nike’s earnings report indicates second-quarter revenues of $11.4 billion, reflecting a 1% year-over-year increase and exceeding analysts’ estimates of $11.25 billion. Direct sales increased 9% year-over-year to $4.7 billion as the company delivered 12% year-over-year growth in NIKE Brand Digital sales.

However, revenues in the quarter were flat on a currency-neutral basis as the company faced the pitfalls of supply-chain challenges. Revenues in Greater China declined due to lower inventory levels as a result of COVID-19-related factory closures.

Diluted earnings, on the other hand, landed a $0.83 a share, up 6% year-over-year and beat consensus estimates of $0.63 a share. Net Income increased 7% year-over-year to $1.3 billion. According to Chief Executive Officer John Donahoe, solid Q2 results affirm that Nike’s strategy is working.

Nike returned $1.4 billion to shareholders, consisting of $437 million in dividends during the second quarter, a 14% year-over-year increase. The company also repurchased $968 million of common stock as part of a $15 billion buy-back program approved in 2018.

Stock Rating

Last week, Telsey Advisory analyst Christina Fernandez reiterated a Buy Rating on Nike stock and raised the price target to $190 from $176, implying 21.03% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 19 Buys and 4 Holds. The average Nike stock price target of $183.55 implies 16.93% upside potential to current levels.

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