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Look for a big beat and a shift in EBIT guidance to be sales+GM to sales+SG&A leverage. It's important to understand the underlying rationale as to why. If people don't get it and the stock trades down, then opportunity knocks for those not involved.

A few considerations heading into Nike this evening.

First off, I’m at $1.17 vs. the Street at $1.05.

2) The big beat should be on revenue. I’ve got ‘em growing 11.4% -- vs. the Street at 8.9%.

3) They might choose to spend some of the upside on the SG&A line, but I’m inclined to think that they show more than one might think. Keep in mind 2 things…

   a) This is their 4Q, and they don’t have as much leeway to push/pull rev and costs between quarters.

   b) The prior year, Nike laid off 7% of its workforce. Morale was awful. The people that made the cut are pumped to be part of the starting lineup. Above all incentives, people at this company are paid based on hitting pre-tax income targets. They NEED to get paid this year.

4) Even though trendline futures should accelerate 300-500bps, Don Blair is likely to be cautious with guidance – like he is every quarter without fail.  My sense is that the company will stand by its ‘high single digit revenue growth and mid-teens EPS growth’ model for the year, though the constituents may change. Why?

   a) The co will have to acknowledge that 1H revenue will be strong – as futures will dictate so. But it will not give any color on 2H.

   b) In that regard, as NKE anniversaries FX benefit on GM and World Cup spend on SG&A, the margin equation will likely shift from being a GM story in 1H to being an SG&A leverage story in 2H.

   c) Tack on the perceived uncertainty about the Yuan (even though Nike’s revenue organization is nearly as big as its sourcing organization in China – ie a Yuan revalue is a near wash), and I don’t think that this guidance will make people step on the accelerator to buy the stock due to a potential ownership rotation – even with a big print.

If the multiple compresses despite better earnings, this is a great shot for those who thought they missed this name on the first ride up.