Nike Earnings Preview: Taking a Breather?

, which recently signed 2014 NFL draft pick Johnny Manziel to be its newest spokesman, is scheduled to report its third-quarter fiscal 2014 results Thursday, March 20, after the markets close. Investors will be hoping for an earnings surprise, rather than the company's first earnings decline in a year and a half, as some have predicted. They will also have fingers crossed for a run of six straight quarters of single-digit top-line gains. Results from Europe and China will be of particular interest.

Analysts on average predict that Nike will say that its revenue for the quarter increased more than eight percent year-over-year to $6.70 billion. Earnings of $0.72 per share are also in the consensus forecast. That would be slightly down from $0.73 per share in the same period of last year. The analysts seem confident, as that consensus earnings per share (EPS) estimate is unchanged from 60 days ago. Note that Nike has topped consensus EPS expectations in recent quarters by as much as 10 percent, though the beat in the previous quarter was by just a penny. In the second-quarter report, Nike said revenue from its Converse brand was up sharply, and that its gross margin also improved. Its future orders also increased, and it bought back $402 million in shares in the quarter. The share price retreated less than two percent t following the report but quickly recovered. Looking ahead to the current quarter, the analysts' consensus forecast calls for sequential and year-on-year growth of both EPS and revenue. So far, full-year EPS are expected to be up about 10 percent on a rise of more than nine percent in revenues, relative to the previous year.

Nike is the world's leading supplier of athletic shoes and apparel. It also sells sports accessories and performance equipment, such as sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and golf clubs. And the company operates retail stores under the Niketown name. The company was founded in 1964 and is now headquartered in Beaverton, Oregon. It is a component of both the Dow and the S&P 500, and it has a market capitalization of around $70 billion. Mark Parker has been the president and chief executive officer since January 2006. Competitors include Wolverine World Wide and Under Armour. The former is expect to show year-over-year declines on the top and bottom lines for the current quarter. Analysts expect the latter to offer double-digit percentage EPS and revenue growth for the current quarter. During the three months that ended in February, Nike announced "Back to the Future" inspired Power Laces, declared a quarterly dividend, marketed the new Flight 23 retail stores, launched its FuelBand SE Silver Edition and appointed a new chief information officer.

The long-term EPS growth forecast is more than 12 percent, and the price-to-earnings (P/E) ratio is lower than the industry average. The return on equity is more than 25 percent, and the operating margin is greater than the industry average. Nike's dividend yield is about 1.2 percent. The number of Nike shares sold short, as of the most recent settlement date, represents a little more than one percent of the total float. But that was the highest level of short interest so far this year. It would take more than two days to close out all of the short positions. Of the 27 analysts surveyed by Thomson/First Call who follow the stock, 15 recommend buying shares, with five of them rating the stock at Strong Buy. Their mean price target, or where they expect the stock to go, is less than three percent higher than the current share price. A positive surprise or rosy guidance could prompt hikes of individual price targets. The share price is about five percent higher than a month ago and taking another run at the 52-week high set in December. The gap between the 50-day and 200-day moving averages has narrowed since the beginning of the year. Over the past six months, the stock has outperformed the Dow Jones Industrial Average.

Keep up with all the latest breaking news and trading ideas by following us on

.