NKE

Are Any Rumored Buyouts Worth Betting On?

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Buyouts and private-equity acquisitions can provide powerful stock moves and often act as the catalyst to drive stock prices to intrinsic value. In the portfolio of our Best Ideas Newsletter, we had held shares of Collective Brands. We liked the company’s valuation, relatively small size, and its attractiveness to other companies (among other things). And while we’d never own a stock solely on speculation of M&A activity, a buyout turned out to be the catalyst for our call on Collective Brands to work out for members. Shares proceeded to appreciate over 35% on our cost basis! In recent months, we’ve heard rumors of cash-heavy companies and private equity funds interested in several different deals. Let’s take a look at a few higher-profile names. … Read more

Footlocker Surges on Fantastic Sales

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Friday morning, athletic footwear retailer Footlocker (click ticker for report: ) reported fantastic third quarter results. Total sales soared 9.3% year-over-year to $1.5 billion, easily exceeding consensus estimates. Earnings growth was spectacular, surging 60% year-over-year to $0.69 (up 47% net of a tax allowance), which was much better than consensus expectations. We’ve been bullish  on North American athletic footwear for some time now, noting that Footlocker is a North American derivative play on Nike (click ticker for report: ). Another strong quarter was headlined by several LeBron and Jordan Brand launches at higher average selling prices, as well as a new adidas Derrick Rose shoe selling at a 45% price increase over last year’s model. A huge boost in performance … Read more

Under Armour’s Third Quarter Lacked Usual Guidance Upside

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Athletic apparel retailer Under Armour (click ticker for report: ) reported solid-third quarter performance Thursday morning. Revenue grew 24% year-over-year to $575 million, in-line with consensus estimates. Earnings increased 23% year-over-year to $0.54 per share, a few cents better than consensus expectations. Gross-margin pressured eased, as margins increased 30 basis points year-over-year to 48.7%. Inventory builds finally alleviated, falling 2% year-over-year to $312 million. Though CEO Kevin Plank cited sourcing issues and “outgrowing” suppliers, we think the company is cleaning up its balance sheet and realized it had far too much inventory on the books. The firm knows how reliant it is upon weather for winter quarter sales, so we like its cautious stance going into winter this year to … Read more