Nike (NKE) reported strong third quarter numbers after the bell on Thursday.
However, growth prospects are relatively limited, with material margin enhancement unlikely due to the already expensive pricing of the company’s core products.
The stock is overvalued at this levels and with the current trade war with China Nike (NKE) will take a big hit.
So Nike has demonstrated some excellent growth over the past several years, though that growth has become choppy recently.
Investors would be wise to avoid the name until the price comes down because the market is assuming a high perpetual growth rate.
Revenue up 3% on a currency-neutral basis.
Gross margins declined 70 basis points.
SG&A increased 11% led by a 15% surge in demand creation expenses.
Income before taxes plunged 12% to only $1.2 billion.
Nike actually needs China to hide slumping North America results. However, in North America, sales fell from last year.
Mark Parker, CEO and Chairman:
As we close Q3, we now see a significant reversal of trend in North America, as momentum accelerates through the scaling of new innovation platforms and differentiated NIKE Consumer Experiences expand across the marketplace.
Nike (NKE) continues to struggle as a result of fierce competition in North America, particularly from Adidas.
Adidas (OTCQX: ADDYY) continues to outperform Nike (NYSE: NKE) in the key North American market.
A trade war with China will be a negative result for Nike (NKE) since the company has huge growth in the international markets so far.
CWEB Analyst’s have issued a Hold Rating for Nike (NKE)
This content is being provided to you for informational purposes only. The content has been prepared by third parties not affiliated with CWEB Inc, a business. This content and any information contained therein, does not constitute a recommendation by CWEB to buy, sell or hold any security, financial product or instrument referenced in the content. This information neither is, nor should be construed as an offer, or a solicitation of an offer, to buy or sell securities by CWEB Inc. CWEB Inc. does not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Unless stated otherwise, the web content provided by the CWEB family of companies is for educational purposes only. The information and tools provided neither are, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities by CWEB Inc. or its affiliates. Unless stated otherwise, no information presented constitutes a recommendation by CWEB Inc. or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy.