- NKE publishes its results after Monday’s session.
- The market expects EPS of $0.82 for Nike stock.
- Analysts expect fourth-quarter revenue of $12.1 billion.
Nike Stock advanced 1% in Monday’s pre-market, a sign that investors are expecting another earnings fight for it fourth fiscal quarter, which ended in May. Results will be released after the market closes on Monday. Wall Street analysts have a consensus forecast of $0.82 GAAP earnings per share (EPS) on revenue of $12.1 billion. Whereas Nike hasn’t missed a consensus EPS forecast since the fiscal fourth quarter of 2020 two years agomany analysts are vocal enough to predict a loss of profits due to lockdowns in China.
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Nike Stock Earnings Prevew: China is worried
More than a third of The growth of Nike since 2016 comes from the Greater China region, according to a Morgan Stanley report. The covid shutdowns in Shanghai and other major population centers in March and April significantly affected sales at major retailers there, and press reports suggest that many retailers are still working through their inventory backlog. . This slowdown in sales must have affected Nike, but no one knows to what extent.
Morgan Stanley analyst Alex Stratton wrote to customers, “EPS might get worse before it gets better.” Barclays was also pessimistic about China, as was Bank of America. A total of 16 analysts lowered their expectations for FQ4, while only two raised their forecasts. Baird, on the other hand, was more optimistic. Its note to customers said one of Nike’s top retailers saw sales in May fall just 19% year-over-year, a sign that things were rebounding quickly once the shutdowns ended.
The same quarter a year ago had Nike earning $0.93 per share on sales of $12.34 billion, so analyst consensus already has a -12% reduction in EPS and -2% in embedded revenue.
Seaport Research Partners was probably the most bearish, writing last Wednesday that “a disconnect between sentiment and reality” was causing NKE Share be overvalued compared to its peers from other retail chains. “Sentiment isn’t exactly great given that NKE shares are down 39% from their 52-week high, but it’s actually better than the company’s average peer, which is in drop of 46% on average. The report also overlooked Nike Stock to trade about twice its peer group on a price/earnings basis. Nike is trading at a forward P/E of around 31.
Nike Stock Forecast: Down 31% YTD
Seems like a bad idea to buy NKE Share before winnings. Yes, an earnings beat could lead to a post-market spike, but we think a bust is more likely. Nike is a beloved stock, and it’s quite rare to see so many analysts talking about near-term warning signs. NKE stock is down 31% for a reason – a recession would sharply reduce the company’s global sales.
Support is at $105 and $103. This is the best entry point. With the crossing of 9 days below the 20 days, NKE Share does not seem optimistic for a long time. A cross above $115 would change the sentiment though.
NKE Shares Daily Chart
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