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Can Nike (NKE) Deliver Yet Another Earnings Beat in Q4? - Analyst Blog

Zacks Equity Research
Updated

We expect leading sportswear retailer, Nike Inc. NKE to beat expectations when it reports fourth-quarter fiscal 2015 results after the market closes on Jun 25, 2015.

Why a Likely Positive Surprise?

Our proven model shows that Nike is likely to beat earnings because it has the right combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.21%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Nike currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Nike’s Zacks Rank #3 and positive ESP make us confident of an earnings beat in the fourth quarter of fiscal 2015.

What is Driving the Better-than-Expected Earnings?

Nike has outperformed the Zacks Consensus Estimate by an average of 9.5% over the past four quarters, with a positive beat in each quarter. The company’s solid quarterly performances reflect its concentration on adopting innovations to keep up with its customers. Nike’s results remain impressive, backed by its constant focus on exploiting growth opportunities along with efficient risk management. Going forward, the company plans to follow these standards in order to enhance shareholder value in the long run.

Consequently, despite the currency headwinds that are expected to linger, management remains optimistic about the fourth quarter as it anticipates the strong momentum to continue.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Aaron's, Inc. AAN has an Earnings ESP of +8.70% and a Zacks Rank #1 (Strong Buy).

BJ's Restaurants, Inc. BJRI has an Earnings ESP of +2.56% and a Zacks Rank #2 (Buy).

Cabela's Incorporated CAB has an Earnings ESP of +1.67% and a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
NIKE INC-B (NKE): Free Stock Analysis Report
 
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
 
AARONS INC (AAN): Free Stock Analysis Report
 
CABELAS INC (CAB): Free Stock Analysis Report
 
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Zacks Investment Research