Nike has published excellent financials for its fourth fiscal quarter. Revenue for the quarter ended May 31, 2021 jumped 96% to $ 12.3 billion, up from $ 6.3 billion in the same period a year earlier, when the company’s sales fell sharply amid the spread of the coronavirus pandemic. The company posted net income of $ 1.5 billion, or $ 0.93 per share, versus a net loss of $ 790 million, or $ 0.51 per share, a year earlier. The market consensus assumed the growth of the indicator to the level of $ 0.51 per share on revenue of $ 11.03 billion.
TIKR
NKE
PRICE
$154
TARGET PRICE
$181
UPSIDE
18%
The company expects revenues to grow more than 10% to over $ 50 billion in the current fiscal year, which began in June. Nike continues to strengthen its brand through product line development (Jordan, Flyknit, Air, React) and improved digital sales. We project the company’s market capitalization to reach $ 300 billion and earnings per share to rise to $ 7 per share. Taking into account the possibility of generating an average annual free cash flow of $ 6 billion over 2022-2025, Nike will be able to return about $ 26 billion to shareholders over the next five years through share buybacks from the market and payment of dividends. We raise our target valuation for Nike shares from $ 145 to $ 181.
Nike, with annual revenue of $44.5 billion in FY21, is the global leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.