Stock Market News – Nike eyed ahead of quarterly earnings report; trade developments also in focus
March 22, 2018 2:26 pm
Sportswear giant Nike is scheduled to release its earnings report for the quarter ending February 2018 after Wall Street’s closing bell on Thursday. The consensus recommendation for the company is “buy”, in line with the average consensus recommendation for Footwear, its peer group.
Nike’s quarterly EPS are projected to stand at $0.53, with analysts’ average EPS estimate remaining constant at this level over the last four weeks. If earnings come as expected, this would translate into a decrease by around 22% relative to last year’s respective release when the firm made $0.68 per share. The most bearish analyst submitting their estimates to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) forecasts EPS to come in at $0.47 and the most bullish puts them at $0.62. The footwear maker surpassed analysts’ projections in all four quarters that preceded, with the beats delivered being double-digit-percentage ones as well.
The forecasted fall in the company’s profits relative to a year ago is expected to be mainly attributed to a charge stemming from changes in the US tax law, with investments in innovation also possibly weighing on profitability.
The Oregon-headquartered corporation’s stock price recorded a record high of $70.25 on February 27. A positive earnings surprise could see its stock price heading towards that mark, potentially meeting resistance around the round figure of $68.00 along the way; the area around this level was congested recently and may hold significance. On the downside and in case of disappointing earnings, the stock price might violate the range around the current level of the 50-day moving average which seems to be providing support at the moment. Should this area indeed fail to hold, additional support could come around the one-and-a-half-month low of $63.89 from March 7.
Also of importance is that the Trump administration is anticipated to announce fresh tariffs to be levied on Chinese goods later on Thursday. This definitely has the capacity to add to the trade war narrative, dampening overall risk sentiment. Should this indeed be the case, then Nike’s stock might decline in the midst of a broader equity selloff.
Moving back to firm-specific considerations, investors will be paying attention to the corporation’s growth in international and domestic markets alike as today’s report is made public. Perhaps the latter will be more closely watched on the face of increased competition in North America from the likes of Adidas and Under Armour.
Possibly detrimental to the company’s outlook is the recent executive-level shakeup on the back of a a code of conduct-related scandal that led to the resignation of the Nike Brand President and Vice President last week – overall weekly stock performance wasn’t hurt to a large extent though, with Nike’s stock price losing 0.6% in the week ending February 16. In this respect, it is notable that the firm’s CEO Mark Park remained committed to serving the sportswear maker beyond 2020, something which was seen as positive, at least to an extent, for investors; the rationale being that steady leadership increases the odds of meeting long-term performance goals.
Nike is a Dow Jones and S&P 500 component stock. Year-to-date and before Thursday’s US market open, the Dow is trading lower by 0.15% and the S&P higher by 1.4%. Nike’s equivalent performance is at 6.1%. The median price target assigned on the stock by Wall Street analysts submitting their forecasts to Reuters currently stands at $72.00, while the mean target price is at $68.78.
Sportswear giant Nike is scheduled to release its earnings report for the quarter ending February 2018 after Wall Street’s closing bell on Thursday. The consensus recommendation for the company is “buy”, in line with the average consensus recommendation for Footwear, its peer group.
Nike’s quarterly EPS are projected to stand at $0.53, with analysts’ average EPS estimate remaining constant at this level over the last four weeks. If earnings come as expected, this would translate into a decrease by around 22% relative to last year’s respective release when the firm made $0.68 per share. The most bearish analyst submitting their estimates to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) forecasts EPS to come in at $0.47 and the most bullish puts them at $0.62. The footwear maker surpassed analysts’ projections in all four quarters that preceded, with the beats delivered being double-digit-percentage ones as well.
The forecasted fall in the company’s profits relative to a year ago is expected to be mainly attributed to a charge stemming from changes in the US tax law, with investments in innovation also possibly weighing on profitability.
The Oregon-headquartered corporation’s stock price recorded a record high of $70.25 on February 27. A positive earnings surprise could see its stock price heading towards that mark, potentially meeting resistance around the round figure of $68.00 along the way; the area around this level was congested recently and may hold significance. On the downside and in case of disappointing earnings, the stock price might violate the range around the current level of the 50-day moving average which seems to be providing support at the moment. Should this area indeed fail to hold, additional support could come around the one-and-a-half-month low of $63.89 from March 7.
Also of importance is that the Trump administration is anticipated to announce fresh tariffs to be levied on Chinese goods later on Thursday. This definitely has the capacity to add to the trade war narrative, dampening overall risk sentiment. Should this indeed be the case, then Nike’s stock might decline in the midst of a broader equity selloff.
Moving back to firm-specific considerations, investors will be paying attention to the corporation’s growth in international and domestic markets alike as today’s report is made public. Perhaps the latter will be more closely watched on the face of increased competition in North America from the likes of Adidas and Under Armour.
Possibly detrimental to the company’s outlook is the recent executive-level shakeup on the back of a a code of conduct-related scandal that led to the resignation of the Nike Brand President and Vice President last week – overall weekly stock performance wasn’t hurt to a large extent though, with Nike’s stock price losing 0.6% in the week ending February 16. In this respect, it is notable that the firm’s CEO Mark Park remained committed to serving the sportswear maker beyond 2020, something which was seen as positive, at least to an extent, for investors; the rationale being that steady leadership increases the odds of meeting long-term performance goals.
Nike is a Dow Jones and S&P 500 component stock. Year-to-date and before Thursday’s US market open, the Dow is trading lower by 0.15% and the S&P higher by 1.4%. Nike’s equivalent performance is at 6.1%. The median price target assigned on the stock by Wall Street analysts submitting their forecasts to Reuters currently stands at $72.00, while the mean target price is at $68.78.
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