Nike (NYSE:NKE) Continues Expanding Margins, Increasing Sales

Sales at Nike (NYSE:NKE) aren't slowing down, as evidenced in the second quarter, and margins continue to widen, creating a powerful narrative for the company.

FBR said, "Strong sales momentum and margin expansion continued in 2Q as Nike exploits the power of its business model and brand strength to drive growth, not only through continued penetration of emerging global markets, its greatest opportunity, but also through impressive strength in mature markets.

"After incorporating 2Q upside and adjusting 2H sales and margin estimates (our top line is higher, and we adjusted margins in 2H to reflect higher input costs and lower SG&A) our FY11 EPS estimate is $4.40 (was $4.36). Our estimate assumes 8.1% top-line growth and operating margin expansion of 13.7% (+70 bps year over year). Our 3Q EPS estimate of $1.10 is $0.01 lower and assumes 9% top-line growth and an operating margin of 13.7%. Off the higher base, our FY12 EPS estimate goes to $4.94 and implies 12% year-over-year growth."

FBR Capital reiterates an "Outperform" on Nike, which is trading at $86.86, dropping $5.44, or 5.89 percent at 11:58 AM EST. They have a price target on them of $98, raising it from $90.