Expectations from fiscal Q4

Nike (NKE) is set to announce its results for the fourth quarter of fiscal 2019 after the financial markets close on June 27. The quarter ended on May 31. In March, Nike announced better-than-expected third-quarter earnings. The company’s overall revenue matched analysts’ forecast. However, investors were disappointed as Nike’s North American revenue lagged expectations. Also, Nike’s fourth-quarter revenue forecast was below expectations. Nike stock declined 6.6% on March 22 in reaction to the third-quarter results, which were declared after the markets closed on March 21.

For the fourth quarter, analysts expect Nike’s adjusted EPS to decline 4.3% to $0.66 while revenue is expected to rise 3.8% to $10.2 billion.

What to Expect from Nike’s Q4 Results

Stock movement versus peers

As of June 24, Nike stock lagged its peers and the S&P 500 on a YTD basis. Nike stock was up 14.0% as of June 24, while Lululemon (LULU), Under Armour (UAA), Skechers (SKX), and Columbia Sportswear (COLM) had risen 50.2%, 44.3%, 34.1%, and 17.5%, respectively, on a YTD basis. The S&P 500 moved up by 17.5% as of June 24.

At the conference call for the upcoming results on June 27, Nike’s investors will want to see the company’s update on the impact of the US-China trade war on its business. Nike and other footwear makers have been reaching out to President Trump to request him to reconsider tariffs on Chinese imports.

Analysts’ recommendations

As of June 24, Nike stock was rated a “buy” by 23 out of 32 analysts covering the leading footwear manufacturer. Seven analysts had a “hold” recommendation while two analysts had a “sell” recommendation.

The 12-month price target of $92.09 reflects an upside of about 9.0% for Nike stock compared to the closing stock price on June 24. Continued strength in international markets, growing digital sales, and improved momentum in the North America business are some key aspects that investors are looking forward to when Nike announces its fourth-quarter results.

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