Security Analysis Example

Nike Inc.

Products: Textile - Apparel Footwear & Accessories

Long Term Strategy: Nike constantly keeps itself abreast of market trends. Sale of running shoes have surged 14% through March 2012 and Nike has proven itself to have forecasted such a demand. In 2011, it generated almost 14% of its $20.9bn global sales through running footwear. As there has been higher costs of raw material and labor in Asia, high end running shoes help Nike recoup costs by passing on the increase In costs to customers. Nike has placed emphasis on social innovation as part of its corporate social responsibility programme and aims to achieve a closed loop business model where there is zero waste in its manufacturing process through reuse and recycling. Such awareness will help Nike achieve a sustainable long-term growth.

Competitive position: Nike reported better than expected third-quarter results with a 15% year-on-year increase in total revenues to $5.8 billion. There has been a surge in demand for US sporting goods group's products in North America. There has also been a rise in earnings of $37 million and rise in earnings per share of $0.12 per share compared with 2011. Moreover, future orders has increased by 15% compared to last year.

Positives: With the upcoming Olympics it is expected that demand for Nike products will increase. Nike is the official kit supplier of the US Olympic Committee guaranteeing it significant exposure during the Olympics, It is also a market leader in the UK with 18% share of the $6.7bn sportswear market as compared to 15% for Adidas, it’s competitor. Nike is planning to push its merchandise through its Westfield London concept store where 70% of ticket holders will definitely pass through.

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Source: www.seekingalpha.com

Nike stock has on average outperformed the S&P 500 during the Olympic Summer Games except in 2008, gaining an average of 6%. Their stock price increased significantly during the Atlanta and Athens games. As...