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Breaking Down Nike's Q3 Earnings Outlook Ahead of March Madness

Benjamin Rains


Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains details what to expect from Nike’s NKE third-quarter fiscal 2019 financial results that are due out after the closing bell on Thursday, March 21. The episode dives into estimates for North America, China, footwear, and much more, with Nike set to take center stage during NCAA March Madness.

Nike stock opened trading Monday morning at $87.22 a share, just below its 52-week and all-time high. The company is scheduled to report its Q3 fiscal 2019 financial results the same day the NCAA tournament starts.

Nike sponsors some of the biggest names in the college basketball, including the four No. 1 seeds. This helps it stand out against rivals Adidas ADDYY and Under Armour UAA. And all of the negative press surrounding Duke star Zion Williamson over the last few weeks flipped after he came back over the weekend looking better than ever.

Nike has remained a giant in terms of collegiate and professional sports, while becoming more important in fashion. Nike is also an athleisure powerhouse, which is a good sign for the company as the likes of Lululemon LULU and others continue to expand in a market that doesn’t look ready to slow down anytime soon.

Furthermore, Nike has pushed deeper into mobile and digital commerce as part of its larger direct-to-consumer push in the Amazon AMZN age. Nike’s outsized impact across Twitter TWTR and Instagram FB compared to its peers is almost shocking. And the company hasn’t abandoned its wholesale business. Instead, Nike has focused on more strategic efforts with the likes of Nordstrom JWN, Dick’s Sporting Goods DKS, Foot Locker FL, and a few others.

Nike’s growth in North America is expected to continue in Q3. Plus, the company is projected to post double-digit sales in Greater China for the 19th quarter in a row. With that said, Wall Street will be closely watching Nike’s performance in the world’s second-largest economy as its slowdown has hurt the likes of Apple AAPL, Alibaba BABA, and others.

Overall, Nike’s Q3 revenue is projected to jump 5.7%, based on our current Zacks Consensus Estimate. At the bottom end of the income statement, Nike’s adjusted quarterly earnings are projected to dip 8.8%. Despite this expected decline, the company has seen some positive earnings estimate revision activity recently and its longer-term outlook appears strong.  

Investors should also note that Nike stock has outperformed its peers and its valuation picture is hardly stretch at the moment. And Nike is a dividend payer that sports a Zacks Rank #2 (Buy) at the moment.

As a reminder, if you feel that we missed something, or if you have any topic suggestions, shoot us an email at podcast@zacks.com. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating wherever you listen to your podcasts.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Twitter, Inc. (TWTR) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
Foot Locker, Inc. (FL) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
Adidas AG (ADDYY) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report
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