Nike (NYSE:NKE): Q1 Earnings Expected to Display a Mixed Bag

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Nike (NYSE:NKE): Q1 Earnings Expected to Display a Mixed Bag

Nike (NYSE:NKE): Q1 Earnings Expected to Display a Mixed Bag


Athletic footwear, clothes, and accessory maker Nike, Inc. (NYSE:NKE) is set to release its first quarter Fiscal 2023 results on September 29, after the market closes.

The Street expects Nike to post diluted earnings of $0.92 per share in Q1, significantly lower than its comparative prior year period’s figure of $1.16 per share. Meanwhile, revenue is pegged at $12.29 billion, almost in line with both the Q1FY22 and Q3FY23 revenue figures.

Nike’s first-quarter performance may have been marred by the issues of excess inventories, inflationary concerns, and COVID-19-related shutdowns in China during the quarter. The sportswear giant has leaned on discounting mechanisms to offload the inventory pile-up that is impacting its margins.

Nonetheless, increased focus on the direct-to-consumer channel may marginally offset the negating effects of the above factors. Moreover, investors may be attracted to the stock owing to its regular quarterly dividend payment of $0.30 per share, implying a current yield of 1.23%. NKE stock has lost 41.1% year-to-date.

Here’s What Baird Analyst Expects from Nike’s Q1 Results

Robert W. Baird analyst Jonathan Komp expects Nike’s results to be a mixed bag based on his assumptions of better-than-feared China sales, gross margin performance, and a potential for a downward revision for Fiscal 2023 EPS, owing to currency and macro headwinds. Nonetheless, Komp is positive about Nike’s long-term earnings growth potential.

The analyst reiterated a Buy rating on NKE stock with a price target of $127, which implies 31.9% upside potential to current levels.

Also, Komp is highly optimistic about Nike’s “accelerated shift to a digital-led positioning behind its Consumer Direct Acceleration strategy (CDA)” which he believes can help the company achieve its “attractive F2025E targeted growth algorithm over time (after current margin pressures subside) calling for +mid-to-high teens annual EPS growth over time and ROIC expanding above the prior low-30% level.”

Is Nike Stock a Buy, Sell or Hold?

On TipRanks, NKE stock has a Moderate Buy consensus rating. This is based on 12 Buys versus six Holds. The average Nike price target of $125.35 implies 30.2% upside potential to current levels.

Disclosure

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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