Apparel giant Nike Inc (NYSE:NKE) looks to provide more signs of a turnaround for investors, with shares hitting new 13-year lows recently. The company reports first-quarter financial results Thursday after market close.
Here are the earnings estimates, what experts are saying and key items to watch.
• Nike stock is trading at depressed levels. Where are NKE shares going?
Nike Q1 Earnings Estimates
Analysts expect Nike to report first-quarter revenue of $11.33 billion, down from $11.72 billion in the first quarter of past year, according to data from Benzinga Pro.
The company has beaten analyst estimates for revenue in seven straight quarters and in eight of the past 10 quarters overall.
Analysts expect Nike to report earnings of 44 cents per share for the first quarter, down from 49 cents per share year-over-year.
The company has beaten analyst estimates for earnings per share in 12 straight quarters.
What Experts are Saying
The Nike chart is a "textbook downtrend" lesson that Freedom Capital Markets Chief Market Strategist Jay Woods says she shares with college students.
"The excitement surrounding CEO Elliott Hill and a potential turnaround has faded as the sneaker giant continues to struggle with weak demand, declining digital sales and persistent pressures in China," Woods said in a weekly newsletter.
Woods said investors want evidence of the turnaround with items such as better products, inventory and better wholesale relationships, but haven’t gotten positives yet. The market expert says China sales are still under pressure and show no sign of things changing.
"Brand relevance and profitability will also be in focus."
Woods writes that Nike lost soccer star Kylian Mbappé to rival footwear company On Holding (NYSE:ONON), which could show that younger competitive companies are willing to spend up for athlete endorsements.
The market expert says the stock technicals for Nike remain ugly, but a bright spot is momentum, with RSI showing some bullish divergence.
"Is that enough to signal a bottom? Not yet. But it may be the one thing on this chart giving the bulls something to work with."
Here are recent analyst ratings on Nike stock and their price targets:
- RBC Capital: Maintained Sector Perform rating, lowered price target from $45 to $40
- Deutsche Bank: Maintained Hold rating, lowered price target from $45 to $37
- Piper Sandler: Maintained Neutral rating, lowered price target from $45 to $38
- Evercore ISI Group: Maintained In-Line rating, lowered price target from $46 to $34
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Key Items to Watch
As mentioned by Woods, items such as inventory, new products and China will be key items that investors and analysts will be watching on Thursday.
Investors may also be looking at sales by region, with North America up 3% year-over-year in the fourth quarter and Asia Pacific and Latin America up 1% year-over-year in the fourth quarter.
Nike Direct was the segment that had year-over-year declines in the fourth quarter, with Nike Brand and wholesale segments up. That could be another area to watch.
The loss of Mbappé likely won’t be covered by management in the prepared remarks, but could come up during the analyst question segment. Look for Nike to highlight its other key athletes and teams under contract.
Ultimately, Nike has been beating analyst estimates for financials, but has no new products or innovation to get investors excited for the turnaround or future growth. Until the company makes an acquisition or announces a major product, shares could be stuck in the downtrend.
Nike Stock Price Action
Nike stock is down 0.64% to $35.61 on Wednesday versus a 52-week trading range of $35.22 to $76.97. Nike shares are down 43.6% year-to-date and trade at lows last seen in October 2013.
Image via Shutterstock/ Coompia77
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