Should You Buy Nike Stock At $122?

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NKE: Nike logo
NKE
Nike

[Note: Nike fiscal year ends in May]

Nike’s stock (NYSE: NKE), a company designing, developing, and marketing footwear, apparel, equipment, and accessory products, has increased by 6% over the last twenty-one trading days (one month) and currently stands at around $122. It should be noted that the broader S&P500 returned a marginal growth over the last month. With its recent Q3 2022 earnings report, the company demonstrated its ability to grow despite the worsening supply chain situation and lockdowns in China. It is worth mentioning that Greater China makes up close to 20% of the company’s revenue and generates around 45% of operating profit. In the recent Q3, Nike’s sales in China fell 8% y-o-y, still, the company managed to post a top-line rise of 5% y-o-y to $10.9 billion. However, its bottom line was down 4% y-o-y to 87 cents per share. 

Considering the last three quarters,  Nike’s revenue was up 7% y-o-y to $34.5 billion, while profitability rose 9% y-o-y to $2.91 per share. The company has focused on protecting its margins which grew 190 basis points to 46.3% in the first nine months of 2022. This is largely a result of Nike increasing its revenue at a greater rate than its cost of sales.

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While the company’s stock price is currently negatively impacted by supply chain woes, inflation, and the Russian invasion of Ukraine, we believe these problems to be short-term and will sort themselves out eventually in the longer term. Now, is NKE stock poised to decline in the short term or are gains looking more likely? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 67% chance of a rise in NKE stock over the next month (twenty-one trading days). See our analysis on NKE’s Stock Chance Of Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of rising’ using last ten years’ data

[1] Returns of 2.4% or higher over a five-day period on 698 occasions out of 2516 (28%); Stock rose in the next five days in 371 of these 698 instances (53%)

[2] Returns of 12% or higher over a ten-day period on 33 occasions out of 2515 (1%); Stock rose in the next ten days in 19 of these 33 instances (58%)

[3] Returns of 6.3% or higher over a 21-day period on 612 occasions out of 2515 (24%); Stock rose in the next twenty-one days in 407 of these 612 instances (67%)

It is helpful to see how its peers stack up. NKE Peers shows how Nike’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 NKE Return 2% -27% 139%
 S&P 500 Return 1% -13% 86%
 Trefis Multi-Strategy Portfolio 3% -17% 227%

[1] Month-to-date and year-to-date as of 6/8/2022
[2] Cumulative total returns since the end of 2016

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