After delivering some superb innings in the stock market in 2014 (23% returns) and 2015 (30% returns), Nike (NKE) became the worst-performing Dow stock in 2016.
Increasing competition from Under Armour (UAA) and Adidas (ADDYY), retail bankruptcies, concerns over future orders, and persistent currency headwinds downplayed Nike’s stock market performance despite the company delivering better-than-expected earnings.
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However, the company returned to the green territory in 2017. Year-to-date (or YTD), Nike has gained 12.7%. Rival Under Armour is the worst-performing stock and has dropped 35% YTD. UAA lost 25% after posting weaker-than-expected results on January 31.
Adidas (ADDYY), on the other hand, has gained 20% to date. The company’s shares touched a record high on March 8 after it posted strong results and announced its plans to expand in North America. Adidas has a 10% share of the athletic footwear market. Nike is the market leader with a 45% market share.
The Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 3.1% of its portfolio in Nike, is up 6.1% YTD.
Nike is currently trading at $57.28, 14% below its 52-week high price. Wall Street expects its stock price to touch $62.47, which indicates an upside of ~9% over the next 12 months. The company’s stock price has been revised upwards by a couple of research firms over the last few days. Read more about recent analyst actions in the next section.
Under Armour’s stock is expected to bounce back and gain around 18% in the next 12 months. Other competitors like Lululemon Athletica (LULU) and Columbia Sportswear (COLM) also have better upsides than Nike. Their stock prices are likely to increase 16% and 12%, respectively.