Earnings Preview for Nike

Nike

will be reporting its fourth-quarter fiscal 2011 results Monday, June 27, after the closing bell. The question for investors is whether the world's largest athletic footwear maker will bounce back from its unexpected earnings miss in the third quarter, following which the stock fell more than 9%. Analysts are looking for Nike to report earnings of $1.16 per share on revenues of $5.5 billion. That is up from $1.06 per share and $5.1 billion in the same period of last year. The consensus earnings estimate is unchanged over the past 90 days. For the full year, per-share earnings are expected to be 10.6% higher than a year ago to $4.32, with revenues up 8.5% to $20.6 billion. Note that, before the earnings miss in the previous quarter, analysts had underestimated Nike's quarterly earnings since well before the recession. The company blamed the miss on higher production and shipping costs.

Beaverton, Oregon-based Nike designs and markets footwear, apparel and accessories worldwide. The company sells its products primarily through more than 340 domestic and 340 international retail stores, as well as through e-commerce, independent distributors and licensees. Subsidiaries include Cole Haan and Converse. During the three months that ended in May, Nike appointed a new board member and made changes to management of its Converse, Hurley and Umbro businesses. The company also signed spokesperson Maya Moore, the first female basketball player to join the Jordan Brand.

Nike has a dividend yield of 1.4%. The price-to-earnings ratio is lower than the industry average, but the 1.6 price/earnings-to-growth ratio suggests overvaluation. The long-term earnings per share growth forecast is 11.2% and the return of equity is 21.4%. Analysts' mean price target (a sign of where they expect the share price to go) is currently $95.63. The share price at Friday's close, $81.18, is 5.9% higher than three months ago. However, the stock has underperformed the footwear industry average, including competitor Adidas, and the broader markets year-to-date.