NKE - Embedded Expectations Analysis - 2020 08 14
NIKE, Inc. (NKE:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 39.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their digital capabilities, demand trends, and the sustainability of recovery in their marketsSpecifically, management may lack confidence in their ability to engage with and serve consumer demand digitally, meet near-term seasonal demand, and invest in necessary digital capabilities. In addition, they may have concerns about demand for the Jordan Brand in Greater China and demand driven through their Apps. Furthermore, they may lack confidence in their ability to capitalize on consumer shifts towards digital, execute their OneNike marketplace strategy, and maintain current liquidity levels. Additionally, they may be concerned about opening a new regional service center on the West Coast, the increased inventory obsolescence reserves, and the sustainability of the recovery in North America, EMEA and APLA
NIKE is engaged in the design, development and marketing and selling of athletic footwear, apparel, equipment, accessories and services. The company focuses its NIKE Brand product offerings in Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training and Sportswear categories. The company markets products designed for kids, as well as for other athletic and recreational uses such as American football, baseball, cricket, golf, lacrosse, tennis, walking, and other outdoor activities. The company has license agreements that permit unaffiliated parties to manufacture and sell, using the company-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities.
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