Nike Stock Drops Amid Concerns Over Supply Chain Issues
Shares of Nike found themselves under pressure after the company released its quarterly results. Nike reported revenue of $12.25 billion and GAAP earnings of $1.16 per share, missing analysts’ revenue estimates and beating them on earnings.
Nike suffered from issues in the global supply chain, as well as the lockdown in Vietnam. The situation with the coronavirus in Vietnam remains difficult, and it looks like Nike and other players will have production issues in Vietnam for the coming months.
The market is still looking ahead, so traders ignored Nike’s earnings performance and focused on the outlook for the coming quarters which will be affected by production issues and supply chain issues. supply.
What’s next for Nike Stock?
Analysts expect Nike to report earnings of $4.23 per share in the current fiscal year and $5.02 per share next year, so the stock is trading at around 30 P/E forward, even after the recent pullback.
While such levels of valuation are typical of large companies in today’s markets, they don’t leave companies much room for error. In the case of Nike, concerns about the negative impact of supply chain issues immediately put significant pressure on the company’s stock.
In August, Nike stock hit record highs above $174, but it has already fallen below the $150 level. It remains to be seen whether value-oriented investors and traders will rush to buy Nike shares after the pullback, as the stock isn’t cheap as earnings estimates have trended lower in recent weeks. In fact, they could continue to fall as analysts adjust their models to the new reality where supply chain issues persist for many months. In this environment, Nike stock will definitely need more bullish catalysts to break the current downtrend and return to growth.
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This article was originally published on FX Empire