As you might know, NIKE, Inc. (NYSE:NKE) just kicked off its latest second-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$10b, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.70, 20% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, NIKE's 30 analysts are now forecasting revenues of US$42.4b in 2020. This would be a modest 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 3.6% to US$3.02. Before this earnings report, analysts had been forecasting revenues of US$42.4b and earnings per share (EPS) of US$3.02 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$110. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on NIKE, with the most bullish analyst valuing it at US$150 and the most bearish at US$82.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Further, we can compare these estimates to past performance, and see how NIKE forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect NIKE's revenue growth will slow down substantially, with revenues next year expected to grow 3.9%, compared to a historical growth rate of 6.2% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.2% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect NIKE to grow slower than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that NIKE's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for NIKE going out to 2024, and you can see them free on our platform here..
You can also view our analysis of NIKE's balance sheet, and whether we think NIKE is carrying too much debt, for free on our platform here.
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