Why Investors Shouldn't Get Used to Nike's High Earnings Growth
Nike (NYSE: NKE) is seeing its digital business boom during the pandemic, but overall, the business is still in recovery mode, with revenue growing by just 3% in the fiscal third quarter. Adjusting for currency, revenue actually fell by 1% year over year.
However, the untold story for Nike has been stellar performance on the bottom line. In the last quarter, a higher gross margin and lower operating expenses contributed to growth in earnings per share of 70% over the year-ago quarter.
If Nike could sustain that level of profit growth, the stock would look like a steal even at its high forward price-to-earnings ratio of 42. But as the economy reopens, management is planning to ramp spending back up to drive long-term growth. Here's what that could mean for Nike in the near term.
Source Fool.com
