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Is NIKE, Inc. (NKE) a Good Stock to Buy?

Other footwear companies include Wolverine World Wide, Inc. (NYSE:WWW), Deckers Outdoor Corp (NASDAQ:DECK), Crocs, Inc. (NASDAQ:CROX), and Skechers USA Inc (NYSE:SKX). Crocs and Deckers are the cheapest of this peer group in terms of trailing earnings multiples; Crocs, Inc. (NASDAQ:CROX) actually trades at only 11 times trailing earnings. Revenue has been growing, and analyst expectations are for earnings to improve over the next couple years such that the forward P/E is only 9. That’s a considerable discount to NIKE, Inc. (NYSE:NKE), and so the stock looks worthy of further research. Deckers Outdoor Corp (NASDAQ:DECK) saw its net income fall 21% in the fourth quarter of 2012 versus a year earlier, though its trailing earnings multiple of 16 would normally assume improvements in net income; the stock is a very popular short, with over 40% of the float held by short sellers. That looks crowded, so we’d avoid either side of the Deckers trade.

Wolverine World Wide, Inc. (NYSE:WWW) and Skechers USA Inc (NYSE:SKX) carry forward P/Es in the 14-15 range, though in these cases the companies are highly dependent on earnings improving from what they have done in the last few quarters. Wolverine- thanks, at least in part, to a recent acquisition- had sales figures rise 60% in its most recent quarterly report compared to the fourth quarter of 2011. There’s a significant short community at that stock as well, but it’s quite plausible that it will achieve its growth targets and so it is likely worth waiting for another quarter or two of results there. Skechers also reported very good revenue numbers, and so while the company has been struggling with profitability (it was actually expected to report negative profits for Q4 2012 but instead experienced a gain) it looks like another stock which investors may be able to make a firmer judgment on after more results.

Disclosure: I own no shares of any stocks mentioned in this article.

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