Why Nike Inc Shares Are Up 23.7% in 2018 (So Far)

What happened

Shares of Nike Inc (NYSE: NKE) are up 23.7% so far in 2018, according to data provided by S&P Global Market Intelligence, as the sporting goods giant begins to turn around its operations after a multiyear funk.

So what

Nike's problem over the last three years has been steadily falling margins. Pricing pressure from competitors had become stronger than in recent memory and Nike was struggling to find a way to maintain industry-leading profitability.

As you can see below, margins started to tick higher in the most recent quarter, the company's fiscal fourth quarter. Revenue was up 13% to $9.8 billion and net income jumped 13% to $1.14 billion. Management said the international market and Nike Direct were responsible for most of the growth, with North America still treading water.

Now what

It may not seem like Nike's growth and margin improvement in early 2018 is a big deal, but it eased some fears that the company is losing its touch in the sporting goods market. Nike still commands a premium from a pricing standpoint and has room to expand internationally. That's why this is still a great stock to own for the long term.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Nike. The Motley Fool has a disclosure policy.