XLY - Nike: Shares Reach A Compelling Valuation Ahead Of Earnings Just Do It
2024-05-30 14:34:13 ET
Summary
- Lower-income households are feeling pressure while the high-end market appears to be doing well, evidenced by reports from Ross Stores and Foot Locker.
- Nike's Q3 results last March showed a mixed performance, with a beat in earnings but a decline in digital sales. China remains a challenge for the company.
- I am upgrading Nike from a hold to a buy valuation given its attractive valuation and solid free cash flow yield.
- Technical risks are still very apparent, though, and I highlight key price levels to monitor.
It’s hard to paint the American consumer with a broad brush. There’s growing evidence that lower-income households are increasingly pressured while the high-end is fairing OK. A trade-down effect appears in full swing, at least that’s a reasonable conjecture following a strong report from Ross Stores ( ROST ) earlier this month. Foot Locker ( FL ) had decent results, too, saying that consumers are willing to pay full price, while firms like LVMH Moët Hennessy - Louis Vuitton, Société Européenne ( LVMHF ) voiced concerns about the luxury market. Finally, DICK’S Sporting Goods ( DKS ) shares soared after its Q1 report earlier this week. ...
Nike: Shares Reach A Compelling Valuation Ahead Of Earnings, Just Do It