Posts Tagged ‘NKE’

  • Nike Continues to Soar
    , March 25th, 2013 at 11:33 am

    Here’s one of my more embarrassing calls. Last August, I said that Nike ($NKE) was absurdly overvalued at $95 per share. The stock has since split 2-for-1 so that was $47.50 post split. Thanks to a strong earnings report, the shares are at $59 today.

    Oops.

    The shoe company beat earnings by six cents per share:

    Earnings excluding items rose to 73 cents per share from 60 cents a share in the year-earlier period.

    Revenue improved about 9 percent to $6.19 billion from $5.66 billion a year ago.

    Wall Street had expected Nike to report earnings excluding items of 67 cents a share on $6.23 billion in revenue, according to a consensus estimate from Thomson Reuters.

    Orders for Nike-branded shoes and clothing scheduled for delivery from March through July 2013, known as futures orders, rose 6 percent compared to orders reported for the same period last year. In North America, the company’s biggest market, orders were up 11 percent.

    As impressive as these numbers are, I still think Nike is too expensive. This is frustrating for me because I like the company a lot but I refused to chase it at a price that I think is unreasonable. Right now, I don’t see how paying more than $45 per share can be justified. The dividend works out to 1.4% which isn’t hard to beat elsewhere. Since 1984, Nike’s stock is up more than 250-fold.

    big.chart03252013

  • Nike Gets Ready to Split
    , December 21st, 2012 at 1:18 pm

    Next week, Nike ($NKE) will split 2-for-1 for the fifth time since 1990. This stock has been an amazing performer. Shortly after the 1987 Crash, shares of NKE got as low as 80 cents. Today the stock is at $104.

    Still, I have to say that I think Nike is very overpriced. Nike should be going for about $70.

  • Nike Is a Strong Sell
    , August 21st, 2012 at 8:01 am

    As far as its business goes, I like Nike ($NKE) a lot. In my mind, it’s a $70 stock. I wouldn’t mind buying it if it were at $60. Fifty dollars would be even better.

    The problem is the stock’s at $95.

    The normally solid company is also starting to show some cracks, and they may soon get much bigger. The last earnings report was a complete disaster. Revenue plunged 12% and Nike missed earnings by 20 cents per share.

    Nike’s profit margins are getting squeezed, so their response is to raise prices even more. I think that’s a big mistake.

    We’re going learn a lot more about this approach soon when Nike unveils its newest LeBron shoe which will retail for over $300.

    Just to make this clear, that’s three hundred dollars of legal U.S. currency for a basketball shoe. Actually, the sneakerati thinks it will be $315.

    I think this is emblematic of some of the larger forces at work in the broader economy. Companies have pushed their margins as far as they can go. Some feel the need to raise prices even more but their customer base is tapped out. It’s like a rubber band that’s been stretched to its breaking point. Something has to give.

    It’s hard to imagine what you can do to a shoe to justify $315 dollars. By the way, did I mention the built-in electronics?

    The coming $315 LeBron X Nike Plus, due in the fall, is expected to come embedded with motion sensors that can measure how high players jump. The LeBron 9 PS Elite basketball shoes, which currently retail for $250, feature Nike’s signature swoosh in metallic gold.

    Nike, based in Beaverton, Ore., says it is passing along price increases because many key materials, such as cotton, have risen in price over the past 18 months. Prices did moderate somewhat in the past quarter.

    Nike is also faces rising labor costs in China, where it manufactures a third of its products.

    Are electronics really needed for this? How about the old school approach—try to touch this rim? If you can, then that’s pretty good. If you can’t, then keep working at it. No electronics needed.

    I think Nike is making a big mistake here. I wouldn’t be surprised to see the LeBron fall way short of expectations. You can tell when an industry is tired—there’s no real innovation, just larger tailfins. That’s what’s going on now.

    I don’t see how Nike can come close to being worth $95. Avoid this stock.

  • Nike Bombs
    , June 28th, 2012 at 4:24 pm

    In May, I listed 13 “stocks to avoid.” One of the stocks I listed was Nike ($NKE). At the time, Nike was at $108.26 per share.

    The stock closed today at $96.89. Shortly after today’s close, Nike reported earnings of $1.17 per share which was 20 cents below Wall Street’s expectations.

    The stock is down to $88.50 after hours.

  • 13 Stocks to Avoid
    , May 14th, 2012 at 10:58 am

    Here’s a list of 13 stocks that are way, way, WAY overpriced. I listed Friday’s closing price with each stock.

    Amazon ($AMZN), $227.68

    Motorola Mobility ($MMI), $39.23 (getting bought by Google)

    Salesforce.com ($CRM), $137.78

    Netflix ($NFLX), $77.38

    Coke ($KO), $77.47

    Whole Foods ($WFM), $88.54

    Costco ($COST), $84.60

    Stericycle ($SRCL), $83.24

    Starbucks ($SBUX), $55.01

    Nike ($NKE), $108.26

    Ariba ($ARBA), $39.17

    Chipotle ($CMG), $408.25

    Intuitive Surgical ($ISRG), $558.95

  • Nike’s Incredible Track Record
    , November 21st, 2011 at 3:28 pm

    Nike ($NKE) is one of those great stocks that doesn’t get nearly as much credit as it deserves. In 1984, the shares were going for less than 50 cents each (split adjusted).

    Just a few weeks ago, NKE hit an all-time high of $97.68. That’s a gain of more than 21,000% in 27 years which is about 22% annualized. Not many hedge funds can do that. The S&P 500 is up about 610% over the same time span.

    I should add that those numbers don’t include dividends and Nike just raised its dividend by 16% to 36 cents per share. The new dividend works out to a yield of 1.6%.

    In early 1997, Nike got to be super-expensive — over $36 per share (again, split adjusted). Three years later, when the market was peaking, Nike was down to just $13. Still, Nike has managed to rebound and outperform the market even when we measure from its early 1997 peak.

    I like the company a lot but the stock is rather pricey. I think NKE would be a much better buy if it dropped down to $70.

    The chart below shows Nike’s stock along with the S&P 500. For comparison, I’ve given the S&P 500 the same starting base as Nike.