Nike Inc (NKE)

EPS of $1.01 beat estimates of $0.84 and revenues of $12.6B missed estimates of $12.89B. Sales declined 2% year-over-year, but its gross margins expanded 1.1% to 44.7% for the quarter. Management noted it is addressing near-term challenges head-on, and guidance was updated to reflect FY2025 revenue to be down mid-single digits, with the first half falling by high single-digits. Several analysts downgraded the name, but historically NKE has shown resilience during economic downturns. 

We certainly do not like the negative momentum here, and from its peak in 2021 it is now at a 55% drawdown. This is a slightly worse drawdown than in 2009, and slightly better than its drawdown from 2000. It is still trading at a fairly high forward P/E of 22.5X, considering the large drawdown, but for a long-term hold, we see this name as having potential to recover eventually. But this process could take several years, and for now we would prefer to wait until its price has settled and found an area of support.
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Shares have fallen the last two quarters as low as $90, but are rising now. It could reach $110. The summer Olympics are a tailwind and results from China just have to be less worse to please the street.

You can start buying this now. It's underperformed. It reports Thursday. Last April, shares held the September 2023 low and was slightly higher. In recent weeks, shares have based and are rising to its critical 200-day moving average. He will take a small position today and add if this cracks its 200-day.

Does not own shares at this time. Is a quality company, and has been watching closely. Waiting for share price to fall before investing in company. Also concerned about product innovation cycle - hoping is restarts soon. Upcoming Olympics could also be good for the company. 

Has sold shares, and bought Target instead. Concerned about China exposure, and US consumer trends. Current share price is under pressure, which could be a good time to invest. Overall, is a quality company. Would buy ~$90/share. 

One of the most valuable brands in the world. Global giant. About 50% off of 2021 highs. Forward growth expectations compounded over 3 years about 16% in terms of earnings, faster growth than what analysts are projecting. This is predicated on margin improvement. Shift to direct-consumer sales is secular tailwind to gross margins. Lots of free cashflow, buying back stock. 23x, cheaper than historical average of 31x. Yield is 1.7%.

He's looking very closely. Hasn't pulled trigger yet.

The shoe business has become very competitive, and Nike is considered expensive by consumers watching their money. The latest China news is encouraging, though, and historically Nike shares don't stay down for long. After the bell today, PVH reported an ugly forecast which will infect Nike and other peers.

Their weakness reflects the Chinese consumer's day of reckoning over American brands, and the government supporting their domestic brands. Look at Tesla. He doesn't know how Nike gets out of this.

Technicals were already week coming into weak guidance. However, speculators are long LULU and this portends weakness short term.

EPS of 77c beat estimates of 74c; revenue of $12.42B beat estimates by 1%. Nike's better-than-expected fiscal 3Q results, coupled with its push on the AIR platform beyond basketball, could drive more product innovation and boost customer interest and sales. Still, guidance for fiscal 4Q sales to be up just slightly and 1H25 sales to fall by low-single digits amid global economic uncertainty is weaker than expected. Revenue for fiscal 2025 could still rise if momentum inflects and turns positive in 2H. A greater push into wholesale to raise visibility, along with product innovation to support the next three years and around the Paris Olympics, are catalysts for upside. Reported sales grew 0.3%, led by a 3% revenue gain in North America and a 4.5% increase in China. EMEA saw weaker results as increased macro volatility and softer customer demand weighed. We would be quite comfortable continuing to hold. 
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It's too early to say whether this will break out, but she likes it long term. Has a lot of exposure to China and faces more competition than in the past. Not sure if she'd add shares now.

Stock cratered over last 2 years, partly due to slowing sales in China, higher interest rates, and more competition. Remains the largest footwear and sportswear company in the world. Margins are picking up, as more selling through its own channels. This lull is the opportunity to buy an iconic brand with phenomenal profit margins. Should return to double-digit growth next year. 

A great business being ignored by investors. Reinvesting free cashflow in everything they do. The best brand, entrenched. One of the most recognized logos in the world. One 1 major acquisition in last 20 years, Converse, so this has been an organic growth story. Yield is 1.4%.

Investors fear China is on the verge of a recession or downturn, so shun any stock that has business there. Nike does a lot of business there. But one day, this situation will clear up and Nike will come out of this well.

Sold it last year, because the company reduced earnings estimates, but their multiple stayed high amid concerns in China and their direct-to-consumer business. The company has probably cleaned the decks since then, and can get their topline going again. Rate cuts will help. Is a decent entry point now around $100. Nike has lost a little buzz, but will regain it.