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Nike (NKE) to Report Q1 Earnings: What’s in the Cards?

Zacks

Leading footwear and athletic apparel retailer, Nike Inc. NKE is slated to report its first-quarter fiscal 2017 results after the closing bell on Sep 27, 2016. In the last quarter, it posted a positive surprise of 2.1%.

In fact, the company has delivered an average positive earnings surprise of 8.3% in the trailing four quarters. Nike’s bottom line beat the Zacks Consensus Estimate in each of the last four quarters. Let’s see how things are shaping up for this announcement.

NIKE INC-B Price and EPS Surprise


NIKE INC-B Price and EPS Surprise | NIKE INC-B Quote

Factors Influencing this Quarter

Nike’s positive surprise history reveals that the company has been gaining from its customer-centric approach, innovative products and strong portfolio. Nike’s constant efforts to innovate, its key growth driver, coupled with continued focus on enhancing retail and online customer experience, augur well.

Looking back at the last quarter, Nike’s earnings beat expectations for the 16th straight quarter. While the abovementioned factors boost confidence, Nike’s top line raises concern. The company’s top line has been missing estimates for quite some time due to adverse currency movements. Additionally, its future orders witnessed a considerable slowdown and lagged expectations in fourth-quarter fiscal 2016. Further, the company faces intense competition in both domestic and international markets from local as well as established players.

Going forward, the company anticipates lingering currency woes to strongly hurt revenues in first-half fiscal 2017. This is likely to weigh on the company’s bottom line performance in the to-be reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Nike is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to surpass earnings estimates. However, this is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Nike is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 55 cents.

Zacks Rank: Nike currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination to post an earnings beat:

SYNNEX Corp. SNX, slated to report earnings on Sep 26, has an Earnings ESP of +1.92% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Carnival Corporation CCL, scheduled to report earnings on Sep 26, has an Earnings ESP of +2.13% and a Zacks Rank #3.

Amazon.com Inc. AMZN, expected to report earnings on Oct 27, has an Earnings ESP of +1.19% and a Zacks Rank #3.

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