Why Nike Stock May Continue to Climb In 2020

To say that Nike (NYSE: NKE) has momentum heading into 2020 is an understatement. Based on incredibly strong demand for footwear, the swoosh has blown past analysts' earnings estimates the last two quarters. For Nike's fiscal second quarter, earnings jumped 35% year over year. That is way higher than the mid-teens growth outlook management gave during its investor day presentation a few years ago. The outperformance has pushed the stock to new highs, currently up 32% over the last year.

To some, the stock may look somewhat frothy. The shares fetch a premium of 30 times next year's earnings estimates. It's not valued as highly as lululemon athletica, but investors are obviously expecting a lot of growth from this industry veteran. Is Nike worth it?

During the recent conference call, management discussed some things that contributed to the company's strong financial performance recently. They didn't chalk up last quarter's robust earnings growth to a fluke. It's clear there are substantial adjustments being made behind the scenes that could allow Nike to continue outperforming its earnings growth outlook through fiscal 2023. If it can maintain earnings growth above the mid-teens, the stock could have more room to run in the year ahead.

Source Fool.com