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Nike (NKE) Dips More Than Broader Markets: What You Should Know

Nike (NKE) closed at $71.12 in the latest trading session, marking a -1.93% move from the prior day. This move lagged the S&P 500's daily loss of 1.82%. At the same time, the Dow lost 2.21%, and the tech-heavy Nasdaq lost 1.7%.

Coming into today, shares of the athletic apparel maker had lost 3.18% in the past month. In that same time, the Consumer Discretionary sector lost 3.95%, while the S&P 500 lost 2.57%.

NKE will be looking to display strength as it nears its next earnings release, which is expected to be December 20, 2018. The company is expected to report EPS of $0.45, down 2.17% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $9.14 billion, up 6.9% from the year-ago period.

NKE's full-year Zacks Consensus Estimates are calling for earnings of $2.62 per share and revenue of $39.05 billion. These results would represent year-over-year changes of +8.26% and +7.29%, respectively.

It is also important to note the recent changes to analyst estimates for NKE. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. NKE is currently a Zacks Rank #3 (Hold).

In terms of valuation, NKE is currently trading at a Forward P/E ratio of 27.63. Its industry sports an average Forward P/E of 14.85, so we one might conclude that NKE is trading at a premium comparatively.

Also, we should mention that NKE has a PEG ratio of 2.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Shoes and Retail Apparel was holding an average PEG ratio of 1.6 at yesterday's closing price.

The Shoes and Retail Apparel industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 84, putting it in the top 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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 follow NKE in the coming trading sessions, be sure to utilize Zacks.com.


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