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

Zacks Equity Research

Nike (NKE) closed at $100.24 in the latest trading session, marking a -1.75% move from the prior day. This change lagged the S&P 500's daily loss of 1.57%. Elsewhere, the Dow lost 1.57%, while the tech-heavy Nasdaq lost 1.89%.

Coming into today, shares of the athletic apparel maker had gained 1.31% in the past month. In that same time, the Consumer Discretionary sector lost 1.19%, while the S&P 500 gained 2.35%.

Investors will be hoping for strength from NKE as it approaches its next earnings release. The company is expected to report EPS of $0.69, up 1.47% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $10.33 billion, up 7.53% from the prior-year quarter.

NKE's full-year Zacks Consensus Estimates are calling for earnings of $3.01 per share and revenue of $42.39 billion. These results would represent year-over-year changes of +20.88% and +8.36%, respectively.

It is also important to note the recent changes to analyst estimates for NKE. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. NKE is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, NKE is currently trading at a Forward P/E ratio of 33.87. For comparison, its industry has an average Forward P/E of 15.8, which means NKE is trading at a premium to the group.

Also, we should mention that NKE has a PEG ratio of 2.43. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Shoes and Retail Apparel stocks are, on average, holding a PEG ratio of 2.05 based on yesterday's closing prices.

The Shoes and Retail Apparel industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 112, which puts it in the top 44% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NKE in the coming trading sessions, be sure to utilize Zacks.com.


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