Nike Earnings Preview—Can the Stock Bounce Back From Its Lows?
Nike Earnings Preview—Can the Stock Bounce Back From Its Lows?
By:Mike Butler
Nike is set to report quarterly earnings after the market closes on Thursday.
- NKE stock has dropped after the last two earnings announcements, with one of the declines exceeding 20%.
- This time, Nike is expected to report earnings per share (EPS) of $0.63 on $12.12 billion in revenue.
- Both revenue and EPS estimates are higher than last quarter.
- This will mark the first earnings call with new CEO Elliott Hill.
Nike (NKE) has endured a volatile year in both the stock market and company structure. This summer, Elliot Hill was named CEO. Current and former Nike employees were apparently very happy with the news because Hill was a beloved coworker at Nike for many years before the appointment. The company’s stock reacted positively as well, reaching a near-term high and almost erasing the disastrous earnings report from June when the stock fell over 20% in a single day.
Nike will report quarterly earnings on Thursday after the market closes. It is expected to announce earnings per share (EPS) of $0.63 on $12.12 billion in revenue.
Nike opened the year at $107.61 and tumbled as low as $70.75 this summer. The stock currently hovers around $78 per share, resulting in more than a 25% loss in the stock price relative to the opening print of 2024.
Matthew Friend, Nike executive vice president and chief financial officer, offered positive words in the last earnings call: “Nike's first-quarter results largely met our expectations. A comeback at this scale takes time, but we see early wins—from momentum in key sports to accelerating our pace of newness and innovation ...
Our teams are energized as Elliott Hill returns to lead NIKE's next stage of growth."
Elliott Hill has a ... large hill to climb ... but employee positivity could breed the motivation to make it happen.
A look at the implied volatility of the options market helps determine how big an expected stock price move the market is pricing in for the earnings call. For this week, we're looking at a +/- $6.21 stock price move based on current implied volatility. This clocks in at over 7% of the notional value of the stock price, which means this earnings call holds some weight. Further proof comes from looking at the March 2025 cycle, which has an expected stock price move of only +/- $10.95.
A lot of question marks surround the future of Nike, and the market is looking for more clarity on those unknowns this Thursday.
Bullish on NKE stock for earnings
If you're bullish on Nike for earnings, you're looking for a strong continuation of its fiscal year with an EPS and revenue beat. Estimates are higher than last quarter, and a double beat could send the stock price higher because it's trading near the lows of the year. The market already looked favorably on the appointment of Elliott Hill as CEO, so if we are to see the stock price rise on Friday, it's got to be on the back of some strong positive momentum.
Bearish on NKE stock for earnings
If you're bearish on Nike for earnings, you likely believe the new CEO appointment is overhyped and the company is still in trouble in the long run. If there is a big miss on EPS or revenue estimates, we could see the stock tumble back to lows of the year. It's concerning that the rest of the stock market seems to be grinding higher while Nike trudges along, but this has been the year of tech and AI after all.
Tune in to Options Trading Concepts Live on Thursday at 11 a.m. CST for a look at options trade ideas in Nike ahead of the earnings announcement after the close!
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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