Bear of the Day: Nike (NKE)

NIKE, Inc. NKE is still struggling to turn around its business. This Zacks Rank #5 (Strong Sell) is expected to see sales decline 9.6% this fiscal year.NIKE, Inc. is a global designer, marketer and distributor of athletic footwear, apparel, equipment, and accessories for a wide variety of sports and fitness activities. Headquartered in Beaverton, Oregon, NIKE’s brands include NIKE and Converse. Converse designs, markets, and distributes athletic footwear, apparel, and accessories.NIKE Beat Again in the Second Quarter but Revenue FellOn Dec 19, 2024, NIKE reported its second quarter fiscal 2025 results and beat on the Zacks Consensus Estimate by $0.15. Earnings were $0.78 versus the consensus of $0.63.It was the sixth consecutive earnings beat in a row. NIKE has an excellent earnings surprise track record with just 2 misses in the last 5 years. That period still includes the start of COVID in 2020 which upended many global companies.Revenue fell 8% to $12.4 billion on a reported basis compared to last year, and was down 9% on a currency-neutral basis.NIKE Direct revenue fell 13% to $5 billion while Wholesale declined 3% to $6.9 billion. Revenue for Converse also fell 17% to $429 million due to declines across all markets.Gross margin also fell 100 basis points to 43.6%.Inventories, which have been the bane of retailers the last few years, however, were flat at $8 billion year-over-year. It reflected an increase in units offset by lower product input costs and product mix shifts.Analysts Bearish on NikeThe analysts didn’t like what they heard. 13 estimates have been cut on NIKE over the last 30 days and none have been raised.The fiscal 2025 Zacks Consensus Estimate has fallen to $2.16 from $2.75 in the last 30 days. That’s an earnings decline of 45.3% compared to last fiscal year when it made $3.95.Analysts are also less bullish on Fiscal 2026. 11 earnings estimates have been cut on NIKE for fiscal 2026 in the last 30 days. That has pushed the Zacks Consensus Estimate down to $2.43 from $3.12 in the 30 days prior.But at least that is earnings growth of 12.3%.Here’s what it all looks like on the chart. It’s not pretty.Image Source: Zacks Investment ResearchNIKE Shares Fall to Multi-Year LowsNIKE shares peaked during the pandemic, in 2021. Since then, it’s been a struggle. The shares are now down 25% over the last 5 years while the S&P 500 is up 80%.In a shorter time of one year, NIKE is also under performing the S&P 500.Image Source: Zacks Investment ResearchYet the shares aren’t even cheap on a price-to-earnings (P/E) basis. NIKE still trades with a forward P/E of 35.It has a long history of being shareholder friendly. NIKE has raised its dividend 23 years in a row. It currently yields 2.1%.It also started a 4-year $18 billion share buyback program in 2022. As of Nov 30, 2024, it had purchased $11.3 billion of shares under that program.NIKE is in the midst of a turn around of the company. It has brought back Elliott Hill as the new CEO. Mr. Hill had retired from the company in 2020.But investors might want to wait on the sidelines for a change in direction on earnings before jumping in on NIKE.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks