Nike Remains the Dow’s Top-Performing Stock

September 22, 2018 by Paul Ausick

Once again, Nike Inc. (NYSE: NKE) reigns as the Dow’s best performing stock for the year to date. The company’s shares rose nearly 2.5% last week and put up another all-time high on Friday. For 2018, the stock is up 36.8%.

The second-best performer among the Dow index equities so far this year is Microsoft Corp. (NASDAQ: MSFT), up 33.6% followed by Visa Inc. (NYSE: V), up 31.6%; Apple Inc. (NASDAQ: AAPL), up 28.6%; and Cisco Systems Inc. (NASDAQ: CSCO), up 26.8%. Of the 30 Dow stocks, 20 have managed to post a gain to date in 2018.

The blue-chip index added 588.83 points last week to close at 26,743.50, up nearly 2.3% compared to the previous Friday’s close. For the third quarter to date, the Dow is up 10.6%, better than the S&P 500 (up 8%) and the Nasdaq Composite (up 6.5%). For the year to date, the index is up 7.7%, trailing both the S&P 500 (up 8.7%) and the Nasdaq Composite (up 14%).

Nike’s run last week began with a big jump on Tuesday when it added about 2.4% to its share price. By Friday it had tacked on a bit and posted an all-time high of $86.04.

The company’s favorability ratings among customers made strong gains among some demographic groups but sank in others. The good news for Nike is that the company got a boost where it most wanted to have one.

The week’s big news for the company came from Berlin. Kenyan marathoner Eliud Kipchoge had set a new world marathon record in Nike shoes, the first time the company has held the marathon world record in 15 years. Nike’s running shoe business is its largest, more than Jordan brand and basketball shoes combined, and more than double its soccer shoe business.

One wrinkle, though, is that the shoes Kipchoge ran in have been shown to add 3% to 4% to a runner’s speed. That could be considered a performance-enhancing quality and could be disallowed by the sport’s governing bodies. At $250 a pop for the commercial version of the Vaporfly shoes, that’s not nothing to Nike.

The stock was upgraded to the equivalent of Buy at several brokerage houses last week and the company’s price target rose by about $3.00 based on a consensus average from 32 analysts. On top of that, Nike is one of several companies we looked at last week that could easily improve its paltry 0.96% dividend yield.

Nike shares closed Friday at $85.55 in a 52-week range of $50.35 to $86.04, a new all-time high. The consensus price target is $85.55 and Nike’s forward price-earnings ratio is 27.16.

The company reports quarterly earnings Tuesday and analysts are looking for earnings per share of $0.62 and revenues of $9.93 billion, a jump of nearly 9% in year-over-year earnings and 9.5% in sales.