Consumer Products

What to Expect When Nike Reports After the Close

Chris Lange

Nike Inc. (NYSE: NKE) is schedule to release its most recent quarterly earnings report after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.48 in earnings per share (EPS) and $9.09 billion in revenue. The fiscal first-quarter of last year reportedly had EPS of $0.73 and $9.06 billion in revenue.

So far this year, Nike has underperformed the broad markets even though the stock is up about 5% year to date. Yet the stock is actually down about 3.5% over the past 52 weeks.

Nike is not the only one that has felt this sting. Under Armour, which has been creeping up on Nike over the past few years, is facing tough headwinds in the sports apparel industry as well, with its stock down over 40% in 2017. Not to mention Finish Line and Foot Locker are in the same boat as well, down 44% and 51%, respectively. Nike appears to be the only one posting a gain, but its scale and market share are a great buffer.

Unfortunately, these companies may have to face more of the same ahead until everyone figures out who will survive and thrive, and when they finally decide that uncanny valuations are there for the taking.

After its most recent earnings report, Oppenheimer gave its two cents on where Nike might be headed:

Nike is pulling back on less differentiated wholesale relationships (estimate as much as $500 million in lost sales in the fiscal first half of 2018), with fiscal 2018 product introductions scaling this year’s innovations (VaporMax/ZoomX); direct Amazon relationship in pilot stage allows control of product segmentation/customer interaction. Longer term, it appears Nike is making the right steps cleaning up distribution/focusing on own DTC, albeit in near term, estimates are coming down (fiscal first-quarter estimates shaping up $0.20 lower than consensus), with North America staying under pressure (fiscal 2018 guided as a hockey-stick recovery year). Staying sidelined; with inventories in North America cleaner (down 6% ending May), there could be some relief in promotional landscape in athletic.

Prior to the release of the earnings report, a few analysts weighed in on Nike:

  • Needham has a Hold rating.
  • Robert Baird has an Outperform rating with a $65 price target.
  • Piper Jaffray has an Underweight rating.
  • Raymond James has an Outperform rating with a $67 price target.
  • Wells Fargo has a Market Perform rating and a $55 price target.
  • Susquehanna has a Neutral rating.
  • Jefferies has a Hold rating.
  • Canaccord Genuity has a Hold rating.
  • Morgan Stanley’s Buy rating comes with a $64 price target.
  • Cowen has a Hold rating.
  • FBR has a Hold rating.
  • D.A. Davidson has a Buy rating and a $69 price target.
  • Wedbush has a Neutral rating.
  • Deutsche Bank has a Buy rating with a $61 price target.

Shares of Nike were last seen trading at $53.25, with a consensus analyst price target of $60.40 and a 52-week range of $49.01 to $60.53.