Shares of retailer Nike (NYSE:NKE) fell in today’s trading as investors await its Q4 earnings results on June 27 after the market closes. Analysts are expecting earnings per share to come in at $0.84 on revenue of $12.856 billion. This equates to 27.3% and 0.5% year-over-year increases, respectively, according to TipRanks’ data.
This is ideal since earnings per share should grow faster than revenue as it demonstrates a high degree of operating and financial leverage in the business. In addition, it’s worth noting that NKE has beaten earnings estimates in seven of its past eight quarters, as per the image below.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 8.13% move in either direction.
What Is the Price Target for NKE?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NKE stock based on 15 Buys, five Holds, and one Sell assigned in the past three months. After a 16% decline in its share price over the past year, the average NKE price target of $111.65 per share implies 19.04% upside potential.
Some bullish and bearish arguments made by analysts are included in TipRanks’ Bulls Say, Bears Say tool pictured below. According to the bulls, NKE’s valuation is near a 10-year low when looking at its P/E ratio. As a result, its current risk/reward ratio is considered compelling. However, a crucial bearish argument is that the company’s sales growth is slowing down amid a difficult macroeconomic backdrop. This isn’t surprising, as people are going to be less willing to spend $100 on hoodies if inflation continues to make everyday essentials a larger part of people’s budgets.
