Stock (Symbol) |
Nike (NKE) |
Stock Price |
$107 |
Sector |
Retail & Travel |
Data is as of |
July 5, 2023 |
Expected to Report |
September 27 |
Company Description |
![]() The Company’s operating segments include North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA). It sells a line of equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. It also designs products specifically for the Jordan Brand and Converse. The Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on basketball performance and culture using the Jumpman trademark. It also designs, distributes and licenses casual sneakers, apparel and accessories under the Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Source: Refinitiv |
Sharek’s Take |
![]() Nike is considered the world’s largest sports apparel company and it is popularly known for its footwear, apparel, and equipment such as Nike, Converse, and Jordan brands. Nike was founded in 1964 as Blue Ribbon Sports by Bill Bowerman and Phil Knight and they initially sold imported Japanese running shoes. Later on, the company rebranded Nike when they introduced the famous Nike Cortez, a lightweight and comfortable family of footwear, to the public. On December 2, 1980, Nike had its IPO and started selling at $22 per share to the public. In 1984, Michael Jordan signed a $500,000 per year NBA sneaker deal for Nike to design and market Air Jordan shoes, and after that, it propelled him to become a cultural icon. As a result, Nike became a dominant player in the sneaker business. Nike currently has two catalysts: Nike Direct and Nike Digital:
NKE is a Blue Chip stock that doesn’t move in sync with its earnings. Sometimes the stock climbs higher even though results are poor. Analysts give NKE’s Estimated Long-Term Growth Rate 15% right now, which is around where I think it should be. The stock also has a dividend yield of 1%. The dividend has increased for 21 consecutive years. In fiscal 2022, management paid a total of $1.8 billion in dividends to shareholders and repurchased $4 billion of NKE shares. Nike is part of the Conservative Growth Portfolio. Profit margins are set to improve now that inventory is back where it should be. |
One Year Chart |
![]() The stock’s P/E is 29. My Fair Value is a P/E of 32. So this stock has some upside potential. My Fair Value is $119. The Est. LTG increased from 7% last qtr to 9% and now 15% this company seems to be a high-teens profit grower to me. |
Earnings Table |
![]() Greater China, which had been a concern in previous quarters, demonstrated significant improvement last quarter. While the wholesale channel faced challenges, NIKE Direct, performed well as revenue in this segment increased by 18%. This success can be attributed to NKE’s investments in its digital channels over the past few years. The digital share of NKE’s total business reached 26% in fiscal year 2023, a significant increase from 10% in fiscal year 2019. Here’s a quick breakdown of NKE’s regions, with the percentage of overall brand sales after F/X (excluding Converse):
Annual Profit Estimates decreased this qtr. That stinks as these figures had been increasing. Qtrly Profit Estimates for the next 4 qtrs are -20%, 14%, 30%, and 50%. For the next qtr, management expects revenue to grow flat to low single-digit as they anticipate slower growth due to inventory reduction 6 months ago. Analysts think that Nike’s revenue will grow by 2%. |
Fair Value |
![]() At one time, analysts felt NKE would earn $5.64 in profits in 2023. Now that estimate is $3.73. So if, hypothetically, the company earns $5 in 2023 and gets a 30 P/E it could be a $150 stock. |
Bottom Line |
![]() Nike’s recent problems include logistics issues, high inventory, and slow sales in China. Now the company is moving past these issues, but global demand is slowing. I think its best to take a step back and just think of this stock as a mid-to-high teens grower then just buy and hold. NKE slides from 10th to 15th in the Conservative Portfolio Power Rankings. The reason for the drop is strength of tech stocks have moved those stocks up in the rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 11 of 31 |