NKE - Embedded Expectations Analysis - 2022 01 21
NIKE, Inc. (NKE) currently trades above corporate and historical averages relative to Uniform earnings, with a 33.0x Uniform P/E (Fwd. V/E').At these levels, markets are pricing in expectations for Uniform ROA to expand to a record-high of 56%, accompanied by 5% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to improve to 37% in 2023, accompanied by 4% Uniform asset growth.
If sustained going forward, these levels would imply a stock price closer to $101, representing approximately 38% equity downside for the firm.
Moreover, the firm's most recent earnings call suggests management may have concerns about supply chain constraints and growth.
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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