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

Zacks Equity Research

Nike (NKE) closed at $97.33 in the latest trading session, marking a -1.02% move from the prior day. This move lagged the S&P 500's daily gain of 0.36%. Elsewhere, the Dow gained 0.62%, while the tech-heavy Nasdaq added 0.35%.

Investors will be hoping for strength from NKE as it approaches its next earnings release. On that day, NKE is projected to report earnings of $0.39 per share, which would represent a year-over-year decline of 54.65%. Our most recent consensus estimate is calling for quarterly revenue of $9.03 billion, down 15.3% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.25 per share and revenue of $39.27 billion. These totals would mark changes of +40.63% and +4.99%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for NKE. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 has moved 0.83% higher within the past month. NKE is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, NKE is currently trading at a Forward P/E ratio of 43.7. For comparison, its industry has an average Forward P/E of 28.61, which means NKE is trading at a premium to the group.

Investors should also note that NKE has a PEG ratio of 2.68 right now. 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 3.15 based on yesterday's closing prices.

The Shoes and Retail Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 215, putting it in the bottom 16% 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.

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


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