SOME QUICK THOUGHTS ON THE NIKE QUARTER
Nike is one of the few market moving names that will report earnings this week so I’m watching the stock actively after hours. When the earnings report hit the wires the stock immediately sold off 4%, but quickly rebounded as big buyers came into the name.
What’s confusing here is why the stock is jumping. They reported EPS of $1.04 vs estimates of $0.97 on sales of $4.8B vs expectations of $4.9B. So, the broader trend of EPS beats and revenue misses appears to be continuing into this quarter. But a closer look at the NKE quarter shows more weakness than expected.
Revenues fell 12% year over year and missed expectations. Gross margins fell year over year from 47.2% to 46.2% – a clear sign that revenues are deteriorating faster than Nike can keep up with. Costs fell substantially, but not enough to maintain margin expansion. An apples to apples look also shows a much lower tax rate and a lower share count. If you compare the earnings year over year on an apples to apples basis they actually added 4 cents to the bottom line via a lower tax rate and lower share count – neither of which are organic. No guidance was provided in the report. So, revenue miss, margins down, organic growth non-existent = stock jumps 6%. The bizarro market continues….
TPC Question,,, I was tracking the Goldman retail sales and I saw a decline for the month of August….yet we had one of the better retail sales for that month…what gives? I’m starting to think that those indicators are really not worth their weight. What do you think? Also, do you have any other “consumer indicators” that you can recommend to me so that I can research? I’d appreciate it.
it looks to me that 3Q reports could be rather “sell the news” as people realize there is no organic growth. this time, market maybe wont take it like in the 2Q “lets go up, since its beat”. also i dont see many companies guiding up, rather down. but who knows?
After the absolutely absurd ramp up I saw today, with bad news to boot (Chicago PMI, ADP Employment report, Mortgage Applications, Corporate Profits), I am being quite disillusioned with how actually “efficient” the market is and wonder if actually doing your homework is worth anything anymore… Good News was a better GDP reading (isn’t that backward looking?), and Oil inventories (a 5% rise on lower than expected inventories?) ……
Come on!! Look at the chart and tell me if that rise in the market on very little good news looks natural to you and all the way to unchanged to boot.