NKE - Embedded Expectations Analysis - 2021 07 30
NIKE, Inc. (NKE:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 30.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about revenue growth, Nike Direct, and SG&A costs.Specifically, management may lack confidence in their ability to maintain strong growth in their digital business, bring more precision to the art of product creation, and remain committed to creating long-term value by serving consumers. In addition, they may be concerned about increases in their SG&A for digital marketing, SG&A growth outpacing revenue growth as spending normalizes, and the brand business mix of Nike Direct. Furthermore, they may lack confidence in their ability to keep the consumer at the center of their strategy, sustain revenue growth, and maintain a strong international revenue mix from Korea and China.
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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