Nike Exceeds Market Returns: Some Facts to Consider

In the latest trading session, Nike NKE closed at $95, marking a +1.72% move from the previous day. The stock's performance was ahead of the S&P 500's daily gain of 0.77%. On the other hand, the Dow registered a gain of 0.49%, and the technology-centric Nasdaq increased by 0.95%.

The athletic apparel maker's shares have seen an increase of 1.31% over the last month, surpassing the Consumer Discretionary sector's loss of 1.38% and falling behind the S&P 500's gain of 3.71%.

The investment community will be paying close attention to the earnings performance of Nike in its upcoming release. The company is slated to reveal its earnings on June 27, 2024. On that day, Nike is projected to report earnings of $0.86 per share, which would represent year-over-year growth of 30.3%. Simultaneously, our latest consensus estimate expects the revenue to be $12.91 billion, showing a 0.69% escalation compared to the year-ago quarter.

Investors should also pay attention to any latest changes in analyst estimates for Nike. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.24% upward. As of now, Nike holds a Zacks Rank of #3 (Hold).

From a valuation perspective, Nike is currently exchanging hands at a Forward P/E ratio of 23.59. Its industry sports an average Forward P/E of 16.45, so one might conclude that Nike is trading at a premium comparatively.

It's also important to note that NKE currently trades at a PEG ratio of 1.74. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. By the end of yesterday's trading, the Shoes and Retail Apparel industry had an average PEG ratio of 1.78.

The Shoes and Retail Apparel industry is part of the Consumer Discretionary sector. At present, this industry carries a Zacks Industry Rank of 50, placing it within the top 20% of over 250 industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To read this article on Zacks.com click here.