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NIKE (NKE) to Report Q2 Earnings: What's in the Offing?
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NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2021 results on Dec 18. The leading sports apparel retailer is likely to have witnessed sales growth in the quarter under review. Despite the pandemic-led disruptions, strong digital momentum across all regions has been aiding the company’s top line. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $10.59 billion, suggesting a 2.6% increase from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s earnings for the fiscal second quarter is pegged at 63 cents, suggesting a decline of 10% from the year-ago reported figure. Notably, earnings estimates have moved north by 2 cents in the past seven days.
In the last reported quarter, the company delivered earnings per share of 95 cents, reflecting a surprise of 97.9%. However, its bottom line significantly lagged estimates, on average, over the trailing four quarters.
NIKE has been benefiting from the shift to digital shopping by consumers due to the pandemic, thanks to its efficient digital ecosystem that comprises its online site as well as commercial and activity apps. The company has been witnessing robust digital sales growth across all regions for the past few months, which has been compensating for the loss of in-store sales. In the fiscal first quarter, digital sales for the NIKE brand witnessed double-digit growth across North America, Greater China, and APLA along with triple-digit growth in EMEA. The persistence of the digital shopping momentum is likely to have contributed meaningfully to its sales in the second quarter of fiscal 2021.
Even as stores reopen, the company has been witnessing strong digital trends, which demonstrates the strength of its brands and investments made over the past several years to improve digital consumer experiences.
Moreover, lower SG&A expenses due to its cost-management initiatives like reducing marketing expenses due to the cancellation of most sporting events are likely to have aided the bottom line in the fiscal second quarter. Also, a decline in demand-creation expenses due to the shift in retail and brand marketing expenses as well as operating overhead expense leverage on lower travel and related expenses are expected to have cushioned the bottom line.
Furthermore, in the last reported quarter’s earnings call, management highlighted that inventory is on track to be normalized in the fiscal second quarter. The company’s return to normalized inventory levels by the end of the fiscal second quarter is likely to have aided gross margin.
However, soft retail traffic at company-owned stores and wholesale revenues has been hurting sales. Despite the store reopenings, the company has been witnessing year-over-year declines in retail traffic at physical stores, owing to the COVID-19 outbreak and related safety measures. Also, higher supply-chain costs have been a headwind.
Zacks Model
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIKE has a Zacks Rank #3 and an Earnings ESP of -7.02%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Crocs, Inc. (CROX - Free Report) has an Earnings ESP of +6.25% and it presently flaunts a Zacks Rank #1.
Deckers Outdoor Corporation (DECK - Free Report) currently has an Earnings ESP of +2.75% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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NIKE (NKE) to Report Q2 Earnings: What's in the Offing?
NIKE Inc. (NKE - Free Report) is slated to release second-quarter fiscal 2021 results on Dec 18. The leading sports apparel retailer is likely to have witnessed sales growth in the quarter under review. Despite the pandemic-led disruptions, strong digital momentum across all regions has been aiding the company’s top line. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $10.59 billion, suggesting a 2.6% increase from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for the company’s earnings for the fiscal second quarter is pegged at 63 cents, suggesting a decline of 10% from the year-ago reported figure. Notably, earnings estimates have moved north by 2 cents in the past seven days.
In the last reported quarter, the company delivered earnings per share of 95 cents, reflecting a surprise of 97.9%. However, its bottom line significantly lagged estimates, on average, over the trailing four quarters.
NIKE, Inc. Price and EPS Surprise
NIKE, Inc. price-eps-surprise | NIKE, Inc. Quote
Key Factors to Note
NIKE has been benefiting from the shift to digital shopping by consumers due to the pandemic, thanks to its efficient digital ecosystem that comprises its online site as well as commercial and activity apps. The company has been witnessing robust digital sales growth across all regions for the past few months, which has been compensating for the loss of in-store sales. In the fiscal first quarter, digital sales for the NIKE brand witnessed double-digit growth across North America, Greater China, and APLA along with triple-digit growth in EMEA. The persistence of the digital shopping momentum is likely to have contributed meaningfully to its sales in the second quarter of fiscal 2021.
Even as stores reopen, the company has been witnessing strong digital trends, which demonstrates the strength of its brands and investments made over the past several years to improve digital consumer experiences.
Moreover, lower SG&A expenses due to its cost-management initiatives like reducing marketing expenses due to the cancellation of most sporting events are likely to have aided the bottom line in the fiscal second quarter. Also, a decline in demand-creation expenses due to the shift in retail and brand marketing expenses as well as operating overhead expense leverage on lower travel and related expenses are expected to have cushioned the bottom line.
Furthermore, in the last reported quarter’s earnings call, management highlighted that inventory is on track to be normalized in the fiscal second quarter. The company’s return to normalized inventory levels by the end of the fiscal second quarter is likely to have aided gross margin.
However, soft retail traffic at company-owned stores and wholesale revenues has been hurting sales. Despite the store reopenings, the company has been witnessing year-over-year declines in retail traffic at physical stores, owing to the COVID-19 outbreak and related safety measures. Also, higher supply-chain costs have been a headwind.
Zacks Model
Our proven model does not conclusively predict an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIKE has a Zacks Rank #3 and an Earnings ESP of -7.02%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Fox Corporation (FOXA - Free Report) has an Earnings ESP of +87.50% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Crocs, Inc. (CROX - Free Report) has an Earnings ESP of +6.25% and it presently flaunts a Zacks Rank #1.
Deckers Outdoor Corporation (DECK - Free Report) currently has an Earnings ESP of +2.75% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>