Nike (NKE) Plunges More Than Broader Markets: What You Need To Know

IIn the last trading session, Nike (NKE) closed at $120.95, marking a -1.99% move from the previous day. This change lagged the S&P 500’s 1.64% loss on the day. Meanwhile, the Dow Jones lost 1.05% and the tech-heavy Nasdaq lost 0.41%.

Today, shares of the sportswear maker have gained 4.03% over the past month. Meanwhile, the consumer discretionary sector lost 1.09%, while the S&P 500 gained 0.73%.

Nike will look to show strength ahead of its next earnings release, which is expected on June 27, 2022. The company is expected to post EPS of $0.84, down 9.68% from the quarter. of the previous year. Meanwhile, our latest consensus estimate calls for revenue of $12.31 billion, down 0.3% from the year-ago quarter.

Investors should also note any recent changes to analyst estimates for Nike. These revisions generally reflect the latest short-term trading trends, which may change frequently. Thus, positive revisions to estimates reflect analysts’ optimism about the company’s business and profitability.

Our research shows that these estimate changes are directly correlated to short-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive externally audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past 30 days, our consensus EPS projection is down 1.88%. Nike currently has a Zacks ranking of #4 (selling).

In terms of valuation, Nike is currently trading at a forward P/E ratio of 27.35. For comparison, its industry has an average Forward P/E of 13.73, which means Nike is trading at a premium to the group.

We can also see that NKE currently has a PEG ratio of 1.95. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. The retail footwear and apparel industry currently had an average PEG ratio of 1.38 as of yesterday’s close.

The retail footwear and apparel industry is part of the consumer discretionary sector. This group has a Zacks industry ranking of 78, which places it in the top 31% of over 250 industries.

The Zacks Industry Ranking assesses the strength of our industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and more, at Zacks.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Darryl A. Chapin