After struggling for the past few weeks, Nike, Inc.’s (NYSE:$NKE) shares saw a 6% rise on Friday morning, June 30. The rise in stock price is mainly thanks to Nike’s stronger-than-expected fourth quarter financial report. It was revealed that the athletic-wear company saw a revenue gain of 5.3% — getting the monetary value to $8.68 billion — as well as an earnings per share (EPS) of 60 cents. Both these numbers exceeded expectations. Revenue beat the average estimate by $40 million, while EPS beat the average estimate by 10 cents. Given the successful earnings this quarter, Nike is expecting mid-to-high-single-digit sales to grow in 2018. However, margins may become tightened by around 50 basis points.
Besides a good financial report, Nike’s rise in its stocks can also be attributed to the company’s confirmation of a new project in partnership with Amazon.com, Inc. (NASDAQ:$AMZN). The project includes Nike selling some of its footwear through the online retailer, with a possibility of selling other products if the footwear sale is successful. Nike CEO Mark Parker has been careful to not strongly confirm anything just yet, citing the fact that the project is still in very early stages. However, Nike is looking forward to the results of the pilot program for the project, Parker said.
Looking at Nike’s stock at a technical level, the numbers remain quite impressive. With the rise, the stock has broken out from its 50-day moving average and 200-day moving average, as well as its pivot point of about $52.90 to an R2 resistance of $57.65. The relative strength index (RSI) of the stock rose from its neutral levels to an overbought 70.90. Despite being overbought, however, a bullish crossover was seen in the moving average convergence divergence (MACD). This suggests that the stock may be worth more than it currently is over mid to long term if the crossover remains.
It is recommended for shareholders and traders of Nike’s stock to re-assess their highs should the price hit around $60.00. However, consolidation could be possible after today’s sudden rise. The trading range of the consolidation could occur between the R1 resistance at $55.17 and the R2 resistance at $57.65. Still, based on the MCAD movement as well as other indicators underlying the stock’s movement, shareholders and traders may stand to benefit by keeping a bullish perspective on Nike’s stock. As well, if you have yet to own some of Nike’s stocks, now may be a good time to invest in the retail company should you see fit.
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