Yesterday before the earnings report the options market was pricing in an expected move of about 8% in either direction. The market closed and we saw a big gap down from the close dropping just over 6% as the earnings got dropped in the over night markets it dropped down to $31.95 and currently shortly after open it's back up to $33.27 The quarter is a mixed bag, revenue missed expectations, Chinese market continues to bleed but it wasn’t all negative. EPS beat expectations, although it was slightly down year over year, Gross Margins improved and inventory was down 3% so that is a positive sign and kind of points to cost controls, margins and inventory management starting to improve. At around $33 Nike would be trading around 15.8x trailing earnings and about 1.06x trailing sales which is inexpensive compared to historical valuations but if we look at forward earnings it’s about 26x using the midpoint of their new guidance and that is not cheap. Kinda in line with where NKE has historically traded. If this drops down to $30.00 forward earnings drops to about 24x and this starts to look like it’s in the fair value range. Look to start building a position at the end of the day this has a decent dividend and a global brand one day it might actually improve and at $30 it is starting to look like it’s fairly priced. I'm watching this one, heading into the holiday season this one is on the watch list and the dividend well it's a 5% yield at the current prices
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2 Comments
Matthew
@slyck · 20d
My eyes are on it as well. Plan to trade options on it if I drop down.
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