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Nike (NKE) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Nike (NKE) closed at $120.95, marking a -1.99% move from the previous day. This change lagged the S&P 500's 1.64% loss on the day. At the same time, the Dow lost 1.05%, and the tech-heavy Nasdaq lost 0.41%.

Coming into today, shares of the athletic apparel maker had gained 4.03% in the past month. In that same time, the Consumer Discretionary sector lost 1.09%, while the S&P 500 gained 0.73%.

Nike will be looking to display strength as it nears its next earnings release, which is expected to be June 27, 2022. The company is expected to report EPS of $0.84, down 9.68% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.31 billion, down 0.3% from the prior-year quarter.

Investors should also note any recent changes to analyst estimates for Nike. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 1.88% lower. Nike currently has a Zacks Rank of #4 (Sell).

In terms of valuation, Nike is currently trading at a Forward P/E ratio of 27.35. For comparison, its industry has an average Forward P/E of 13.73, which means Nike is trading at a premium to the group.

We can also see that NKE currently has a PEG ratio of 1.95. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Shoes and Retail Apparel industry currently had an average PEG ratio of 1.38 as of yesterday's close.

The Shoes and Retail Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 78, putting it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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