Despite rising nearly 40% since the start of 2020, at the current price of around $ 142 per share, we believe (NYSE: NKE) still has a long way to go. The company designs, develops and markets footwear, clothing, equipment and accessories. Even when Nike faced the temporary shutdown of the majority of its global stores, the company managed to post revenue of $ 38.2 billion for the past 4 quarters, down 6% from the previous year. consolidated figure of $ 40.8 billion for the previous 4-quarter period. . Additionally, Nike has added more than 70 million new members globally since the start of the coronavirus pandemic. While we believe the company remains fundamentally overvalued, trading at around 47 times the consensus 2021 earnings, Nike has momentum on its side and there may be room for more gains in the action. Nike has shown it still has what it takes to grow – with revenue for the six months of fiscal 2021 (ending May 2021) up 4% year-over-year (in YoY), while net profit increased 12% year-over-year. Nike’s stock is already around 96% higher than it was at the end of fiscal 2018 (end of May). Our dashboard, provides the key figures of our thinking, and we explain it in more detail below. Part of the rise in the price of shares over the past 2 years is justified by the growth of around 3% observed between $ 36.4 billion in 2018 (end of May 2020) and $ 37.4 billion in 2020. This, combined with a 1.3-fold increase in net profit margin from 5.3% in 2018 to 6.8% in 2020 and a 4% reduction in the number of shares due to share buybacks in ‘worth $ 11.6 billion, contributed to an increase in earnings per share of 37%. Finally, Nike’s P / E multiple fell from almost 60x at the end of fiscal 2018 to 32x at the end of fiscal 2019 and then fell back to around 61x at the end of fiscal 2020. While the company’s P / E has now risen to 86x, it appears to be overstated when the current P / E is compared to levels seen in recent years. Nonetheless, the company’s shares are likely to continue to rise, as they currently remain a favorite in the footwear and sportswear category. Nike is doing exceptionally well now thanks to its loyal customer base, unique product portfolio, digital infrastructure and impressive gains in China. In the second quarter of the fiscal year (ended November 30), the company’s revenue increased 9% year-over-year and diluted earnings per share by 11% year-over-year. The retailer has seen a dramatic shift in revenue generation from stores to e-commerce, with its direct-to-consumer segment growing 84% year-on-year to more than 30% of total sales. In addition, the Greater China segment recorded 24% revenue growth and now accounts for 21% of Nike brand revenue.
- According to Fintech Zoom, “Is Nike Stock attractive even after a 40% rally?”.
- Nike’s stock is already around 96% higher than it was at the end of fiscal 2018 (end of May). Our dashboard, provides the key figures of our thinking, and we explain it in more detail below.
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