Apparel giant Nike Inc. (NYSE: NKE) is trying to convince investors a turnaround is real. The stock, meanwhile, keeps voting no. Shares recently touched new 13-year lows, and the company reports first-quarter financial results Thursday after market close.
Here's what the numbers look like, what the experts are saying, and what actually matters in the report.
Nike Q1 Earnings Estimates
Analysts expect Nike to report first-quarter revenue of $11.33 billion, down from $11.72 billion in the first quarter a year ago, according to market data.
Here's the strange part: Nike has beaten analyst estimates for revenue in seven straight quarters and in eight of the past 10 quarters overall. Beating estimates has become routine. So has disappointing investors.
On the bottom line, analysts expect earnings of 44 cents per share for the first quarter, down from 49 cents per share year-over-year. Nike has beaten analyst estimates for earnings per share in 12 straight quarters.
What Experts Are Saying
The Nike chart is a "textbook downtrend" lesson that Freedom Capital Markets Chief Market Strategist Jay Woods says she shares with college students.
"The excitement surrounding CEO Elliott Hill and a potential turnaround has faded as the sneaker giant continues to struggle with weak demand, declining digital sales and persistent pressures in China," Woods said in a weekly newsletter.
Woods said investors want evidence of the turnaround, things like better products, cleaner inventory and stronger wholesale relationships, but haven't gotten positives yet. She says China sales remain under pressure with no sign of things changing.
"Brand relevance and profitability will also be in focus."
Woods also notes that Nike lost soccer star Kylian Mbappé to rival footwear company On Holding (NYSE: ONON), a signal that younger competitors are willing to spend big on athlete endorsements.
The technicals, in Woods' view, remain ugly. But there's one bright spot: momentum, with the RSI showing some bullish divergence.
"Is that enough to signal a bottom? Not yet. But it may be the one thing on this chart giving the bulls something to work with."
Here are recent analyst ratings on Nike stock and their price targets:
- RBC Capital: Maintained Sector Perform rating, lowered price target from $45 to $40
- Deutsche Bank: Maintained Hold rating, lowered price target from $45 to $37
- Piper Sandler: Maintained Neutral rating, lowered price target from $45 to $38
- Evercore ISI Group: Maintained In-Line rating, lowered price target from $46 to $34
Key Items to Watch
As Woods mentioned, inventory, new products and China are the big three that investors and analysts will be watching Thursday.
Sales by region also deserve a look. North America was up 3% year-over-year in the fourth quarter, while Asia Pacific and Latin America rose 1% year-over-year in the same period.
Nike Direct was the segment that posted year-over-year declines in the fourth quarter, while the Nike Brand and wholesale segments grew. That's another area worth watching.
The Mbappé loss likely won't come up in prepared remarks, but it could surface during the analyst question segment. Expect Nike to highlight its other key athletes and teams under contract.
Ultimately, Nike keeps beating estimates on the financials but has no new products or innovation to get investors excited about the turnaround or future growth. Until the company makes an acquisition or announces a major product, shares could stay stuck in the downtrend.
Nike Stock Price Action
Nike stock is down 0.64% to $35.61 on Wednesday, against a 52-week trading range of $35.22 to $76.97. Shares are down 43.6% year-to-date and trade at lows last seen in October 2013.