Stock of the day 18/12/2015 – Nike Inc

It has been another stellar year for Nike, one that, despite being literally one of the most recognisable brands in the world, has led to a succession of fresh highs as 2015 has rumbled on.

Can the company end the year at even greater peaks following its Q2 2016 earnings release next Tuesday?

After starting 2015 at £96.58 Nike had surpassed its previous all-time highs, last struck in May 2012, by the start of August, touching $117.50. Soon to follow, however, was the mini-crash of that month, something that swiftly saw Nike touch a 6 month low of $94.73 on Black Monday. Yet despite its rather large exposure to China the stock couldn’t have recovered much quicker, lifting back to the $116 mark by the end of September.


(Source: IT-Finance.com 18/12/2015)

It is here where Nike really took off once again, its Q1 2016 results on the 24th September sending the stock to new heights. With a 23% jump in profit to $1.18 billion alongside a 5.4% increase in total revenue to $8.14 billion (including a 30% surge in Chinese sales that saw Nike bypass the slowdown issues that have plagued other companies) the stock leap nearly 9% the day after the announcement alone. Its gains kept going across the end of September and the first half of October, culminating in Nike hitting a fresh high of $133.52.

From this point onwards Nike underwent a rare blip, trading laterally around the $131 mark until the start of November, when a 7.5% fall sent the stock back to a 6 week low of $120.44. Yet like it has done throughout the year Nike quickly recovered after providing investors with more good news, this time a 2 for 1 stock split alongside a $12 billion share buyback scheme. This helped Nike surge back to the $130s, eventually leading it an all-time peak of $135.23 by the end of the month.

A bit of a wobble across December then took Nike away from this high, leaving it at $126 by the middle of the month, before bouncing back to a current trading price of $130.23 (IT-Finance.com, 18/12/2015).

The big question is can Nike keep up its trend of hitting new highs following its Q2 results next Tuesday? Analysts are expecting earnings per share between $0.83 and $0.89 (around 16% higher than this time last year), alongside revenue growth of 5.4% driven, once again, by sales in China and the US.

Nike Inc has a consensus rating of ‘Buy’ and an average target price of $138.55.