Nike (NYSE:NKE) shares jumped on promising news from its continuing and worldwide futures operations.
Revenue from continuing operations rose 9 percent to $521 million ($1.14 a share) from a year ago. Revenue rose 7 percent to $5.96 billion. Analysts expected Nike to earn $1 a share on $6.01 billion in revenue. Worldwide futures orders were up 6 percent.
Booming Shoe Market
One of the ways in which Nike keeps their shoe sales up is by re-releasing certain Air Jordan model shoes. For instance, the Air Jordan XI “Bred” shoe, last released in 2008, will be re-released tomorrow. The duplication allows for low design costs, and the high price tag ($185) is far from dissuading for customers; lines will start forming early in the morning and many fans will not even get the chance to buy a pair. What is especially intriguing about the Air Jordan brand is that unworn shoes tend to have a high resale value, depending on the rarity of the shoe and length from its last release. Many customers who purchase the “Bred” shoe tomorrow are looking to make a nice profit by reselling it when quantities run out or, for the long-term investor, months or years down the road.
CHEAT SHEET Analysis: Are the Revenue Numbers a Catalyst for Nike Shares?
One of the core components of our CHEAT SHEET Investing Framework consists of looking at catalysts that will move a company’s stock. The higher-than-expected revenues are certainly a catalyst for Nike’s short-term prospects, but there is plenty of evidence to support the long-term investment in Nike as well. With their unique business model in the basketball shoe industry, as well as their strong worldwide futures numbers, Nike will continue to ride their established brand name for years to come.
Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.