Should you buy Nike stock? (July 2023)
- 8 months ago
Nike stock analysis.
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Nike reported earnings last week and the stock dropped about 2%. Shares are now down 40% since hitting a peak in 2021.
That means Nike is now valued at 168 billion dollars. It’s got 10.6 billion of cash and investments and 8.9 billion of long-term debt so the enterprise value is roughly 166 billion.
In its latest report, Nike reported 51.2 billion in revenue for the latest fiscal year which was an increase of 10%.
That’s decent growth but bottom-line earnings are suffering from inflation. Nike’s cost of sales increased by 14.6%, driven by an increase in raw materials and labor costs, so bottom line net income shrunk by 16% to 5.1 billion.
That means Nike stock is currently valued at 3.2 times revenue and 33 times earnings. Looking at a historical chart, both ratios are near the bottom of their historical range though they’re not necessarily low enough to signal a buying opportunity.
Looking ahead, Nike retains a dominant position in what is a highly competitive market. 65% of its revenue comes from footwear, of which there are no shortage of rivals, from established brands like Adidas to new upstarts like On Cloud.
So the key to Nike’s future will be it’s ability to expand globally and on this front, there was good news. The latest report revealed that sales in China grew 16% in Q4 with a 22% increase in apparel sales. That compares to only a 5% increase in the North American market.
This is a good sign that Nike will benefit from China’s post-pandemic recovery. In fact, earnings from the Chinese segment was up a whopping 70% on the quarter while all other areas were down.
#stocks #investing #nikestock #stockstobuy
Join 8000 other investors: https://www.overlookedalpha.com
Nike reported earnings last week and the stock dropped about 2%. Shares are now down 40% since hitting a peak in 2021.
That means Nike is now valued at 168 billion dollars. It’s got 10.6 billion of cash and investments and 8.9 billion of long-term debt so the enterprise value is roughly 166 billion.
In its latest report, Nike reported 51.2 billion in revenue for the latest fiscal year which was an increase of 10%.
That’s decent growth but bottom-line earnings are suffering from inflation. Nike’s cost of sales increased by 14.6%, driven by an increase in raw materials and labor costs, so bottom line net income shrunk by 16% to 5.1 billion.
That means Nike stock is currently valued at 3.2 times revenue and 33 times earnings. Looking at a historical chart, both ratios are near the bottom of their historical range though they’re not necessarily low enough to signal a buying opportunity.
Looking ahead, Nike retains a dominant position in what is a highly competitive market. 65% of its revenue comes from footwear, of which there are no shortage of rivals, from established brands like Adidas to new upstarts like On Cloud.
So the key to Nike’s future will be it’s ability to expand globally and on this front, there was good news. The latest report revealed that sales in China grew 16% in Q4 with a 22% increase in apparel sales. That compares to only a 5% increase in the North American market.
This is a good sign that Nike will benefit from China’s post-pandemic recovery. In fact, earnings from the Chinese segment was up a whopping 70% on the quarter while all other areas were down.
#stocks #investing #nikestock #stockstobuy