Adidas AG (ADDYY) Moves 3% Higher: Will This Strength Last?

Zacks Equity Research
·2 min read

Adidas AG (ADDYY) shares rallied 3% in the last trading session to close at $181.54. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.8% gain over the past four weeks.

Adidas’ stock rally is an extension of its continued growth efforts. The company recently introduced the “Own the Game” business strategy, focused on expanding e-commerce sales, as a percentage of revenues, along with significant growth in operating margin. The company expects this to drive double-digit earnings growth in the next five years. Driven by a strong start to the strategy, the company reported strong first-quarter 2021 results, with currency-neutral sales up 27%. Direct-to-Consumer sales improved more than 30%, with 43% growth in e-commerce. Operating margin expanded 123 basis points to 13.4%.

The company raised its outlook for 2021 as it remains confident of strong sales recovery in 2021. It expects sales growth in the high-teens rate in 2021.

Price and Consensus

Price Consensus Chart for ADDYY
Price Consensus Chart for ADDYY

This company is expected to post quarterly earnings of $0.88 per share in its upcoming report, which represents a year-over-year change of +210%. Revenues are expected to be $5.51 billion, up 39.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Adidas AG, the consensus EPS estimate for the quarter has been revised 8.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on ADDYY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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