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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 19 June 2015 at 10:30 GMT

Earnings Watch: Nike outpacing the competition?

  • FedEx tumbles on soft earnings
  • Oracle emphasises cloud growth
  • Focus on direct sales for Nike

Nike
Just do it? Photo: iStock 

By Mads Koefoed

FedEx and Oracle tried their best to inject some life into an otherwise low-key week for earnings on Wednesday. 

Freight and logistics company FedEx mostly managed to live up to expectations, though earnings were ultimately a bit on the soft side. That was not enough for the fickle market, however, which promptly sent FedEx down 3% on the day of the announcement followed by a bounce of sorts yesterday (plus 1%).

Oracle did worse than FedEx on the earnings side by delivering earnings-per-share nearly 10% below expectations, and revenue missed as well. 

However, the strong USD during Oracle's fourth quarter was blamed and the company was quite bullish on the key cloud businesses segment (stating, for example, that it "will be world's largest enterprise cloud company"). As a result, Oracle's shares gained 0.6% on Wednesday, but then plummeted 6.7% yesterday as the market digested the earnings report.

Turning to next week's events, Carnival (the Miami-based operator of cruise ships) will lead the way on Tuesday followed by agricultural product giant Monsanto on Wednesday. On Thursday, the market's attention will turn towards Accenture, Hennes & Mauritz and Nike, the latter being the largest company to report next week at a market capitalisation of $91 billion.

The street looks for EPS of $0.83 on revenue of $7.68 billion when Nike reports its Q4'15 results. This translates into growth rates (year-over-year) of 6.4% and 3.4% respectively if realised. 

Considering the impact the US dollar has had on other global players, this will be studied. Nike's Q3'15 results, reported back in February, included a modest hit to revenue and future orders and the company outperformed earnings expectations. 

A focus on direct sales is another topic of interest. If Nike becomes even more successful in this area, it should help fuel margin expansion.

— Edited by Michael McKenna

Mads Koefoed is head of macro strategy at Saxo Bank.

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