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

Zacks Equity Research

Nike (NKE) closed the most recent trading day at $98.45, moving -0.77% from the previous trading session. This move lagged the S&P 500's daily gain of 0.06%. Elsewhere, the Dow lost 0.15%, while the tech-heavy Nasdaq added 0.33%.

NKE will be looking to display strength as it nears its next earnings release, which is expected to be June 25, 2020. In that report, analysts expect NKE to post earnings of $0.03 per share. This would mark a year-over-year decline of 95.16%. Meanwhile, our latest consensus estimate is calling for revenue of $7.50 billion, down 26.37% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for NKE. Recent revisions tend to reflect the latest near-term business trends. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 2.58% lower within the past month. NKE currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, NKE is holding a Forward P/E ratio of 38.74. For comparison, its industry has an average Forward P/E of 27.84, which means NKE is trading at a premium to the group.

Also, we should mention that NKE has a PEG ratio of 3.17. 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 2.77 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 238, which puts it in the bottom 7% 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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