Nike Inc (NKE)

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Earnings Preview: Nike Inc. (NYSE: NKE)
By: 24/7 Wall St. | June 28, 2023

• Here’s a preview of two companies set to report earnings late Thursday or early Friday. These are the last two notable earnings reports scheduled for release until late next week. Our preview of that one will be posted on Wednesday, July 5.

Nike

Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have risen by about 2.8%, including a decline of 7.4% in the first month of the company’s August quarter. The Dow component reports quarterly results after Thursday’s closing bell.

Nike recently announced new wholesale agreements with Macy’s and Designer Brands, likely due in part to Nike’s continuing struggle to reduce its inventory. Unfortunately, neither deal will have any effect on fourth-quarter results. Two things to watch for: sales in China, which are expected to improve, and guidance for the 2024 fiscal year.

Of 37 brokerages covering Nike, 24 rate the shares at Buy or Strong Buy. Eleven more have a Hold rating. At a price of around $113.60 a share, the upside potential based on a median price target of $135.00 is about 18.8%. At the high price target of $160.00, the implied upside is 40.8%.

For the company’s fourth quarter of fiscal 2023, revenue is expected to come in at $12.59 billion, up 1.6% sequentially and 2.9% higher year over year. Adjusted EPS are forecast at $0.67, down 15.4% sequentially and by 33.3% year over year. For the full fiscal year ending next May, estimates call for EPS of $3.90, up 20.7%, on sales of $54.25 billion, up about 6.5%.

Nike stock trades at 35.2 times expected 2023 EPS, 29.1 times estimated 2024 earnings of $3.90 and 24.7 times estimated 2025 earnings of $4.61 per share. The 52-week range is $82.22 to $131.31. Nike pays an annual dividend of $1.36 (yield of 1.22%). Total shareholder return for the past year was 4.06%.

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