Nike’s earnings beat analysts’ estimates.
The company’s gross margin increased despite supply chain issues.
Nike stock could gain additional momentum should demand for riskier assets continue to grow.
Nike stock rebounds after strong earnings report
Shares of Nike gained strong bullish momentum after the company published its report on the results of the third fiscal quarter. The company reported revenue of $10.9 billion and GAAP earnings of $0.87 per share, beating analysts’ earnings and revenue estimates.
The company noted that “NIKE Brand Digital business fueled growth, increasing 22% […]”. Nike’s gross margin rose to 46.6% despite supply chain issues and rising inflation.
The report highlighted Nike’s ability to operate in the current market environment through the success of its digital strategy and strong brand. The market was pleased with the strong earnings report and Nike shares tried to settle above the $139 level.
What’s next for Nike Stock?
Analysts expect Nike to report earnings of $3.65 per share in the current fiscal year and earnings of $4.65 per share in the next fiscal year, so the stock will is trading at 29 P/E forward.
It’s worth noting that earnings estimates have fallen in recent weeks as analysts worry about supply chain issues and the impact of rising inflation on consumers’ ability to buy Nike products.
The earnings report indicated that Nike was able to post strong results in the current market environment, so earnings estimates may start to rise in the coming weeks, which will be bullish for the stock. .
The key question is whether the market is willing to pay around 30 PER forward for a clothing company in a rising interest rate environment. At this point, it looks like Nike stock will have a good chance of gaining additional momentum should demand for riskier assets continue to rise despite geopolitical uncertainty and the hawkish Fed.
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This article was originally published on FX Empire