After rallying 43% in the past 12 months, Nike stock has brushed aside the pandemic and the competition to reach a series of new highs. The company is now worth $215 billion and has become a part of the discussion of investors on whether it still possesses the stamina for maintaining its dominance in the apparel and athletic footwear market.
Growth Expectations Of Nike
Last FY, Nike’s earnings dropped by 36% due to the closure of retail locations and consumers spending less due to a tough environment of employment. But Nike, while losing the spring, will win the marathon. Earnings are predicted to hit 78% in the 2021 fiscal year and another 28% in the 2022 fiscal year. Last quarter the company swung back to the profit territory while handily beating expectations. People don’t invest in the company due to its dividend, however, this small dividend has always increased for the past 19 years. They will reinvest most of the company’s cash towards growth opportunities however, it pays 44% of its profits as dividends.
Nike has always outrun the competition by offering the consumers a non-stopping wave of innovation and the new ways by which they obtain them. Going forward, the company will resume asserting its leadership with the changing times. For starters, the company is building accelerated trends in online shopping that were created in the pandemic. Digital sales continue rising across the globe with the EMEA area being the place where sales got tripled past quarter. An increase in consumer awareness plus access to Nike digital channels will fuel growth for the coming years. China will be the growth catalyst for the company.
Nike stock is not cheap at forwarding earnings of 49x and 6x sales. But given their growth prospects and track records the valuation doesn’t seem too imperfect. There is luck on Friday morning for short-term investors of Nike. But if you are looking for long-term then it is a perfect moment to invest in this stock.