2023-03-24 09:53:29 ET
Nike ( NYSE: NKE ) dropped earlier this week in the immediate aftermath of its earnings report. While the shoe and athletic apparel maker topped EPS and revenue figures, it also outlined a backlog in inventories, sending the stock lower.
Still, even with the inventory concerns, Wall Street analysts remain generally bullish about Nike’s longer-term prospects. Does the post-earnings dip create a good buying opportunity?
Nike’s Latest Earnings Report
Shares of Nike ( NKE ) have trended higher in 2023, rising by 1.2% so far this year. However, the stock experienced selling following the release of the firm's quarterly report . The stock dropped nearly 5% in the day following the announcement.
NKE posted Q3 GAAP EPS of $0.79, which topped estimates by $0.25. At the same time, the company also delivered revenue of $12.39B (+14.0% Y/Y) which topped forecasts by $910M.
Wholesale revenues grew 12% on a reported basis and 18% on a currency-neutral basis. However, inventories were $8.9B, up 16% compared to the prior year period.
Is NKE a Buy?
Wall Street experts see Nike ( NKE ) in a bullish light. Of the 39 analysts surveyed by Seeking Alpha , 16 rate the stock as a Strong Buy, with another 9 issuing a Buy recommendation. Meanwhile, 13 see the stock as a Hold, while one analyst believes NKE is a Strong Sell.
Currently, the stock trades near the $120. Analysts have placed an average price target for NKE at $135.61, which would represent a rally of more than 11%. At the same time, the high-end price target is $185 and the low-end target is $98.
Seeking Alpha's Quant Ratings are a little bit more conservative in their approach to NKE, viewing the stock as a Hold. SA provides factor grades of an F and D+ when looking at Nike's valuation and growth. At the same time, NKE received an A and a B for its profitability and momentum.
Here's a breakdown of the above information:
What Others Say
Seeking Alpha contributor The Value Analyst views Nike as a Buy , stating: "China's reopening continues to be the most prominent theme for Nike. And China has been the biggest story for Nike over the past few years, being the most significant source of growth."
However, not all share the same optimism. Fellow SA contributor Stone Fox Capital believes Nike is a Sell , concluding that the stock "continues to trade at a stretched valuation."
Other Approaches
For investors who are unsure about Nike but still want exposure to the shoe and apparel firm, exchange traded funds represent an alternative investment vehicle. Currently, Nike is held by 292 different funds. See below the ETFs with the heaviest weightings towards the stock:
- Optimize AI Smart Sentiment Event-Driven ETF ( OAIE ) at 7.01% weighting.
- Consumer Discretionary Select Sector SPDR ETF ( XLY ) at 4.53% weighting.
- Monarch Blue Chips Core ETF ( MBCC ) at 4.16% weighting.
- Direxion Daily Consumer Discretionary Bull 3X Shares ( WANT ) at 3.86% weighting.
- American Century Focused Dynamic Growth ETF ( FDG ) at 3.70% weighting.
Aside from the ETF front, investors could look at some of Nike's competitors, such as Under Armour ( UAA ), Adidas ( OTCQX:ADDYY ), Sketchers ( SKX ), and Allbirds ( BIRD ).
For more on NKE, it appears that the firm's earning results have divided analyst’s opinion of the stock.
For further details see:
Nike fell in the wake of its latest earnings report. Is the stock a buy from here?