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Nike Stock Surges on Margins and Rebound in China

Posted on 23. Mar, 2013 by in Business, Business Featured

March 23, 2013 - Nike Inc. the largest sporting goods business in the world, increased the most in over four years following the easing of concerns by investors that the company’s profitability and its China business were becoming weaker.

Nike has rebounded by 15% this year in comparison to only a 9.1% by the S&P 500 Index

Nike has rebounded by 15% this year in comparison to only a 9.1% by the S&P 500 Index

Shares in the company, based in Beaverton, Oregon increased by 11% to $59.53 at Friday’s close on Wall Street. It was the largest gain for Nike since October 28 of 2008. Nike has rebounded by 15% this year in comparison to only a 9.1% by the S&P 500 Index.

Increases in prices that were put into place last year have finally paid dividends for the company, as the company saw its gross margin get wider for the first time in over two years. At the same time, the company reported that Nike brand orders in China, not including changes for currency exchange, gained after sales in that country dropped 10% during the last quarter for a second consecutive quarterly drop.

The increase in gross margin during the fiscal third quarter from Nike which ended on February 28, comes at a time when its earnings from operating increased 16% to over $662 million from $569 million a year earlier, Nike said in a statement. The increase was equivalent to 73 cent per share and analysts had predicted an increase to 67 cents per share.

The company released an initial forecast for their fiscal 2014 year that stayed in line with estimates for analysts. The company said sales would increase in the mid single digit range percentage wise and earnings per share would be up in the mid teen percentage. Analysts’ gains had been 7% for Nike revenue and 14% for earnings.

Following the release of the most recent results, a number of financial analysts raised Nike’s price estimates.

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