Nike Continues to Soar

Here’s one of my more embarrassing calls. Last August, I said that Nike ($NKE) was absurdly overvalued at $95 per share. The stock has since split 2-for-1 so that was $47.50 post split. Thanks to a strong earnings report, the shares are at $59 today.

Oops.

The shoe company beat earnings by six cents per share:

Earnings excluding items rose to 73 cents per share from 60 cents a share in the year-earlier period.

Revenue improved about 9 percent to $6.19 billion from $5.66 billion a year ago.

Wall Street had expected Nike to report earnings excluding items of 67 cents a share on $6.23 billion in revenue, according to a consensus estimate from Thomson Reuters.

Orders for Nike-branded shoes and clothing scheduled for delivery from March through July 2013, known as futures orders, rose 6 percent compared to orders reported for the same period last year. In North America, the company’s biggest market, orders were up 11 percent.

As impressive as these numbers are, I still think Nike is too expensive. This is frustrating for me because I like the company a lot but I refused to chase it at a price that I think is unreasonable. Right now, I don’t see how paying more than $45 per share can be justified. The dividend works out to 1.4% which isn’t hard to beat elsewhere. Since 1984, Nike’s stock is up more than 250-fold.

Posted by Eddy Elfenbein on March 25th, 2013 at 11:33 am

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Tickers: NKE