Athletic maker and shoe giant NIKE, Inc. (NKE) will release its fourth quarter fiscal 2023 financial results on Thursday, June 29, 2023, at approximately 1:15 p.m. PT, following the close of regular stock market trading hours. (1)
The Swoosh is forecasted to earn $0.67 per share (EPS) on sales of $12.5 billion. (2) NIKE has exceeded Wall Street’s consensus EPS projections in the last four quarters. There are some inventory concerns heading into next Thursday’s news.
Morgan Stanley told investors, “Recent NA & Europe sportswear channel checks make it clear that demand for mass sportswear has potentially slowed, leaving a sizable inventory glut across the industry that is currently being promoted away…a potential headwind that could pressure NKE revenue & margin.” (3)
It’s been our experience, mostly bad, that inventory troubles can lead to negative guidance as profit margins shrink as management tries to move stale products with discounts. It’s also been our experience that when investors anticipate bad news, the most likely surprise is good news. Unless things are way worse than thought.
Looking at NKE’s chart, the stock recently broke a downtrend with an aggressive move higher on thick volume, which is usually a good sign. Shares have settled after the vertical rise and may be ready to make the next move after touch support at $108.
On a better-than-expected report with it’s not as bad as we thought or positive guidance, a trip to the 50-day moving average of $116.92 would not be out of the question. Since bad news is what’s expected, it may already be built into the price, limiting downside to support around $104. The exception is inventory woes are far worse than expected and guidance comes in way below the current thinking. If that’s the case, $100 is the firewall between here and retesting the 52-week low.
Trading earnings is speculation and only for the most aggressive investors who can afford to lose a lot of money in short periods.
Rich Meyers
1 – https://investors.nike.com/investors/news-events-and-reports/investor-news/investor-news-details/2023/NIKE-Inc.-Announces-Fourth-Quarter-Fiscal-2023-Earnings-and-Conference-Call/default.aspx
2 – https://finance.yahoo.com/quote/NKE/analysis?p=NKE
3 – https://finance.yahoo.com/news/nike-stock-slips-as-analysts-warn-of-inventory-problems-ahead-of-earnings-152626759.html