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Nike (NKE) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Nike (NKE) closed the most recent trading day at $83.41, moving +1.16% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.05%. At the same time, the Dow added 1.02%, and the tech-heavy Nasdaq gained 1.66%.

Prior to today's trading, shares of the athletic apparel maker had gained 0.52% over the past month. This has outpaced the Consumer Discretionary sector's loss of 1.6% and the S&P 500's loss of 0.08% in that time.

Wall Street will be looking for positivity from NKE as it approaches its next earnings report date. This is expected to be June 27, 2019. In that report, analysts expect NKE to post earnings of $0.67 per share. This would mark a year-over-year decline of 2.9%. Meanwhile, our latest consensus estimate is calling for revenue of $10.16 billion, up 3.82% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for NKE. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 0.33% lower. NKE is currently a Zacks Rank #4 (Sell).

Digging into valuation, NKE currently has a Forward P/E ratio of 27.62. For comparison, its industry has an average Forward P/E of 14.57, which means NKE is trading at a premium to the group.

Meanwhile, NKE's PEG ratio is currently 2.12. 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. Shoes and Retail Apparel stocks are, on average, holding a PEG ratio of 1.72 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 85, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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