Nike Earnings—What You Need to Know
Nike Earnings—What You Need to Know
By:Mike Butler
The market expects a stock-price move of more than 6%
- Nike is set to report quarterly earnings after the market closes tomorrow.
- The company is expected to report earnings-per-share of $0.53 on $11.65 billion in revenue.
- Both figures are lower than last quarter's expectations.
- Nike expressed concerns for growth last quarter, and the stock price fell sharply.
Nike earnings preview
Nike (NKE) is expected to report earnings per share (EPS) of $0.53 on $11.65 billion in revenue tomorrow, and the market is expecting some volatility. The company’s stock price has dropped three earnings calls in a row, with the most recent drop maxing out over 20% lower overnight.
With that said, the stock price has almost recovered fully from the recent low of $70.75 and climbed back to around $89 per share. But it reached a high of $123.34 at the end of 2023, so it's not been pretty for the athletic retailer.
Last quarter, Nike Chief Financial Officer Matthew Friend offered some clarity around the bumpy road ahead: “We are driving better balance across our portfolio. While we are encouraged by our progress, our fourth-quarter results highlighted challenges that have led us to update our Fiscal ’25 outlook. We are taking actions to reposition Nike to be more competitive and to drive sustainable, profitable long-term growth."
The market will want to see what changes are being made to turn the ship for Nike, and the competitive repositioning will be a focal point this earnings call.
Nike continues to outperform earnings-per-share expectations, beating estimates by over 20% each of the past three quarters. Still, the market has not looked favorably upon the news given the drop in the stock price each of the past three quarters after the announcement is released.
John Donahoe stepped down as Nike CEO shortly after the stock price meltdown last quarter, and he is being replaced by Elliot Hill, who has been with Nike for many years and is popular in the Nike employee community. The stock price gapped higher following the news of Donahoe’s replacement.
Based on current implied volatility, NKE stock has an expected move of +/- $5.87 this week. This is just over 6% of the notional value of the stock price, which is right in the middle of the range of what we've seen this quarter—most stocks land between 5%-10% of the stock price. Looking at the end of the year, we see an expected stock price move of +/- $11.46 through the January 2025 options expiration cycle. This means about half of the expected move through the end of the year is being priced into this week's earnings announcement. Expect some fireworks after Tuesday's call!
Bullish on Nike stock for earnings
Investors who are bullish on NKE stock for earnings are looking for a clear redemption plan following the reduced annual targets from the previous earnings call, resulting in over a 20% sell-off in the stock price. If the market can continue to see the CEO change as a positive sign and estimates can be exceeded this time around, we could see Nike stock begin to recover from recent lows.
Bearish on Nike stock for earnings
If you're bearish on NKE stock for this earnings call, you're looking for an earnings miss and more neutral to bearish sentiment from the earnings call. If EPS estimates are missed, something that has been pretty solid quarter after quarter, we could see the stock fall back to recent lows. Changing of the guard isn't always a good thing, but the market has expectations from the change and that could mean more murky waters ahead if the quarterly figures come in light.
Regardless of your sentiment, tune in to Options Trading Concepts Live on tomorrow at 11 a.m. CDT for a full options trading overview ahead of Nike earnings!
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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