Should You Buy Nike Stock At $136?

by Trefis Team
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Nike’s stock (NYSE: NKE), a company that designs, develops, and markets footwear, apparel, equipment, and accessory products, has remained flat over the last week (five trading days) at levels of around $136 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for NKE stock average around 1.6% in the next one month (twenty-one trading days) period after experiencing a flat growth in a week.

But how would these numbers change if you are interested in holding Nike stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Nike stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF NKE stock moved by -5% over five trading days, THEN over the next twenty-one trading days, NKE stock moves an average of 4.2%, which implies an excess return of 1.9% compared to the S&P500.

More importantly, there is a 65% probability of a positive return over the next twenty-one trading days and a 65% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of Nike Stock Movements:

Question 1: Is the average return for Nike stock higher after a drop?

Answer: Consider two situations,

Case 1: Nike stock drops by -5% or more in a week

Case 2: Nike stock rises by 5% or more in a week

Is the average return for Nike stock higher over the subsequent month after Case 1 or Case 2?

NKE stock fares better after Case 1, with an average return of 4.2% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.0% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Nike stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold NKE stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For NKE stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

 You can try the engine to see what this table looks like for Nike after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

NKE returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Nike by changing the inputs in the charts above.

For further comparison among peer groups, it is helpful to see how they stack up. Nike Stock Comparison With Peers shows how Nike compares against peers on metrics that matter.
See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams |Product, R&D, and Marketing Teams

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