Strong earnings reported by Nike (NYSE:NKE) this week. It delivered better than expected EPS for the fifth consecutive quarter. Is it time to buy some of its stock?
Nike needs no introduction as its brand has global recognition. The company reported the financial results for the second quarter of its 2022 fiscal year, and yet again, it delivered better than expected results.
As the management noted, the results on the quarter are another proof that the strategy is working despite a dynamic and challenging environment. Supply chain challenges and inventory constraints were not enough to affect the company’s growth and optimism reigns.
Nike beats on both EPS and revenue growth
Diluted EPS for the quarter was $0.83, up 6% and revenues were $11.4 billion, up 1% compared to the prior year. This was the fifth consecutive quarter when the company beats the EPS estimate, so the strong track record continues.
What do analysts say about Nike’s stock price?
The stock price sits close to its record levels, and it is up +10.96% this year. The rally was partly fueled by the five-year share repurchases program approved by the board of directors in June 2018.
As such, 60.8 million shares have been repurchased under the program and 6 million in this quarter alone. In total, Nike returned about $1.4 billion to shareholders on the quarter, including $437 million as dividends and $968 million as share repurchases.
Out of the 96 analysts covering the company, 86 have buy ratings and 9 have neutral ratings. Only 1 analyst has issued a sell rating and the highest price target for Nike’s stock price is $221.
Most recently, Telsey Advisory Group has maintained its buy rating with a price target of $190, while Morgan Stanley did the same, but this time with a higher price target of $206.
At the current market price, Nike trades at a P/E Non-GAAP (TTM) ratio of 41.09, much higher than the 13.04 sector median. On the other hand, the company’s profitability exceeds the sector median by 26.33%. Another positive is the strong free cash flow position, despite being partially offset by share repurchases and cash dividends. Also, the management reiterated its fiscal 2022 revenue outlook and sees the revenue growing in the next quarter.
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