When you think of sports, what brands come to mind? In terms of ticking all boxes – whether in technical excellence or style – Nike, Inc. (NYSE:NKE) shines as one of the top choices. Nike isn’t just a big player in sports; it’s a globally recognized name, extending far beyond athletics.
It’s the reigning champion in the realm of apparel brands, valued at around $31.3 billion, outshining even luxury heavyweight Louis Vuitton under LVMH (OTCPK:LVMHF). To put it in perspective, adidas (OTCQX:ADDYY), a long-standing contender from Germany, takes the fifth spot with a brand value roughly half of Nike’s.
Nike is a juggernaut with a market cap of $163 billion and FY22 sales reaching $51.2 billion. Despite uncertainties surrounding the economy, Nike remains poised to deliver market-beating performance and grow dividends by a low double-digit percentage annually over the next decade.
Nike Remains a Blue Chip At Its Finest
Nike has been a consistent performer, demonstrating steady revenue and operating profit growth over the past decade. With inflationary pressures squeezing profit margins, a recovery is expected in H2 2024, positioning Nike to unlock value for shareholders.
Surprisingly, Nike’s Q1 FY24 earnings surpassed expectations, leading to a 20.8% surge in the stock price. As we anticipate Q2 FY24 earnings, Nike projects a slight uptick in revenue and a 1% growth in gross margins from the preceding year.
Soon To Be A Dividend Aristocrat
Nike boasts of increasing its dividend for 22 years straight and anticipates a dividend raise of more than 10% in FY24. With a payout ratio at 41.9%, the dividend seems very sustainable, offering ample flexibility to the company.
Not Cheap, Yet Compelling Value
Despite trading at a premium, Nike is actually trading at a discount compared to its own 5-year averages. With an anticipated EPS growth averaging around 13%, Nike is expected to outpace the market.
Nike remains a solid blue-chip business with consistent growth and a strong outlook. With expectations of revenue growth and EPS, Nike is poised to offer promising total annualized returns over the next decade.
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