What's Going On With Nike Stock?

Nike Inc NKE shares are trading lower by 8% to $82.21 this week, going into the close of Friday’s session. Shares have been volatile this week after multiple firms cut their respective price targets on the stock following a first-quarter revenue miss.

What Happened: While Nike managed to beat earnings expectations, reporting 70 cents per share versus the expected 52 cents, the company missed revenue projections, posting $11.59 billion in sales against estimates of $11.65 billion.

The company also saw notable year-over-year declines across key markets and business segments, sparking concern among investors and leading several analysts to lower their price targets.

The 10% year-over-year drop in total revenues was driven by weak sales in key regions. North America, Nike’s largest market, reported an 11% decline, while sales in Greater China fell 4%, Europe saw a 13% drop and Asia Pacific and Latin America experienced a 7% decline.

These declines reflect persistent challenges, including softer demand, heightened competition, and a slow recovery in consumer spending post-pandemic, particularly in China.

Read Also: Nike Stock Takes Hit After Q1 Earnings: Analysts Expect Comeback To Take Time With ‘Uncertain Path’

What Else: The announcement that Nike was withdrawing its full-year guidance further spooked investors. In the earnings call, CFO Matthew Friend noted that the company is lowering its revenue expectations for the year, citing slower traffic in Nike Digital and weaker retail sales trends.

The company now anticipates second-quarter revenue to decline between 8% and 10%, with gross margins expected to fall versus the prior year.

Adding to investor uncertainty is the leadership transition happening at Nike. CEO John Donahoe is set to step down on October 14, with long-time Nike veteran Elliott Hill poised to take the reins. While Hill's return was framed as a positive by Friend, the market often reacts warily to leadership changes, especially amid challenging business conditions.

Read Also: Wall Street Rallies, Small Caps Outperform On Strong Jobs Report, Chinese Stocks Soar To 32-Month Highs: What’s Driving Markets Friday?

Is NKE A Good Stock To Buy?

An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision.

For example, for Nike, you'll notice that earnings in its last quarter grew 34.62% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio.

On the valuation side, Nike's price to earnings ratio – a measure of how much an investor pays for the company's earnings – is compressed 14.89% in the current quarter when compared with last year. That places it below similar businesses Deckers Outdoor, Skechers USA, Birkenstock Holding in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time.

There are many different valuation metrics that may help you make a decision. Find more on Nike's quote page, or if you'd like a deeper dive in an advanced program, try Benzinga PRO for free.

NKE has a 52-week high of $123.39 and a 52-week low of $70.75.