How The Primaries Will Go
Why Ron DeSantis Says the Debt Deal Is ‘Totally Inadequate’
Rolling Stone Picked the Weirdest Fight to Have With Ron DeSantis
Why the White House Correspondents' Association Ripped Into Joe Biden This Weekend
Why the FBI Raided a Florida Blogger's Home This Month
The DCCC Is Made Up Of Morons
They’re Conditioning Americans to Hate White People
They Fought For Us – Now It's Our Turn
'What Is She Doing Here?': Report on Feinstein's Health Details Senator's Confusion Over...
Lest We Forget
The Debt Ceiling Deal From Hell
'Odds Are That the Only Person Who Could Beat Sherrod Brown' Is Someone...
Memorial Day Commemorates No Greater Love
How the COVID-19 Pandemic Caused Massive Mental Illness on the Left
Rise of the War on White People

This Company is Purchasing $5 Billion of Its Own Stock

The opinions expressed by columnists are their own and do not necessarily represent the views of

While sports enthusiasts focus on the Euro 2012 soccer championship, stock enthusiasts should be focusing on a growing leader in the global soccer goods market.  NIKE now has a 36% market share via its sports apparel and equipment products, almost equalling the long-dominant Adidas which holds a 38% market share.

NIKE, Inc. (NKE, $107.46) is a world leader in the athletic apparel & equipment market.  NIKE markets its products to over 170 countries, with an audience ranging from the non-athletic consumer to college & professional sports teams.  Its footwear business alone dominates 50% of that market.

A small percentage of the company's products include the brands Cole Haan and Umbro, which it plans to divest by year-end 2013, and also Converse, Hurley, and Nike Golf.  "We view this [divestiture] as a positive as this focus should enable to company to invest resources on the highest potential opportunities for Nike such as Nike, Jordan, Converse, and Hurley," says Citi Investment Research & Analysis (CIRA).  CIRA recommends a "buy" on NKE stock, and continues, "NKE is a solid global growth opportunity with exposure to emerging middle classes, has a heritage of innovation and creating new categories, is in the midst of strong product cycles, has compelling revenue and margin channel drivers (in addition to international, also direct to consumer retail and eCommerce channels)."

NKE Chart

NKE data by YCharts

2011 was a record year for NIKE.  They achieved revenues of $20.9 billion and net income of $2.1 billion.  S&P comments, "We see revenues reaching $24.2 billion in FY 12 (May) and $26.7 billion in FY 13, supported by product innovation, category penetration, and geographic expansion.  The company has also launched new retailing and marketing strategies designed to more closely align its operations with key markets."  NIKE is capturing global market share, especially in China and emerging markets.

Wall Street expects earnings per share (EPS) to increase 12%, 17% and 16% in fiscal years 2012 through 2014.

Standard & Poor's Research (S&P) assigns NIKE Inc. a Qualitative Risk Assessment of Medium.  "Our risk assessment reflects what we see as NKE's strong financial and operating metrics, offset by an increasingly competitive global marketplace and weak consumer spending in the U.S. and Europe."  Margins have been under pressure from slow-moving merchandise in China and Europe, higher product costs, and adverse currency effects.  NIKE's long-term debt ratio is 3%.

S&P carries a 4-Star Buy rating with a 12- month price target of $130.  S&P gives NKE stock a 100% Investability Quotient Percentile, which means "NKE scored higher than 100% of all companies for which an S&P Report is available."

The 2012 price earnings ratio (PE) is 21.8, and the dividend yield is 1.33%.  The ten-year PE range has been between 10 and 26, without any aberrations in the range.

The company has a $5 billion share repurchase plan in progress, and has repurchased $1.9 billion in shares through FY 2011.

NKE stock has been marching upwards, with intermittent price corrections along the way, for many years.  After reaching a new high of $114.81 in May 2012, the stock corrected with the market and has settled into a trading range of $104 to $112.

It is a little early to know whether the U.S. stock markets have stabilized after their recent pullback.  The job of the investor remains to identify good stocks, and good prices at which to buy them.  NIKE is a company whose stock will likely please growth stock investors.

For Townhall readers we’ve published our 2012 model portfolio for Trading and Aggressive Growth. For our subscribers, we’ve created model portfolios for Growth and for Growth and Income.  

Investors who want to see model portfolios for Growth & Income investors and Growth investors can visit Goodfellow LLC and sign up for the one-month free trial subscription.

Free. You can’t beat that. Did I say free?  

Join the conversation as a VIP Member


Trending on Townhall Video