- Nike reported earnings after the close on Monday.
- NKE stock is higher after a beat on revenue and earnings per share.
- Nike says Vietnam production levels are now back to 80% of prior volumes.
Nike (NKE) seems to have yielded to its longtime trademark – "Just Do It". The company certainly did that on Monday as it unveiled another strong set of results. Not only that, but concerns over supplies from Vietnam were quieted, and the shares are likely to open higher on Tuesday.
Nike stock news
Earnings per share came in at $0.83, ahead of the $0.63 estimate. This was a significant beat. Revenue was also ahead at $11.36 billion versus estimates for $11.25 billion. Nike shares popped over 2% on the earnings release. With global equity markets looking a bit healthier on Tuesday morning, expect more gains for NKE stock price as the session progresses.
Recent concerns over Vietnam supplies had held Nike stock back. Vietnam is a major textile supplier globally, and it was not just Nike that was affected. A covid outbreak had forced numerous closures. However, Nike outlined in the earnings release that Vietnam production levels were now back up to 80% of preclosure levels. The company said it expects revenue to grow in the low single digits for Q3 in line with consensus at just over 2%. Nike has mentioned that input costs are rising and is planning for supply chain costs to rise. Nike did say that it expects margins to rise 150 basis points. This margin gain is being driven by a direct selling online model that Nike has been adopting.
Nike stock forecast
Nike is not cheap. The stock I mean, not the sneakers! The company trades on a relatively high price/earnings multiple of 45. This is a significant premium to its peers and reflective of Nike's leadership position. Technically, things do not look too positive in the longer-term outlook either. We have a very clear double top in place from August and November. It remains to be seen if Nike shares will be able to hold above resistance at $164-$166 from the 9 and 21-day moving averages. We doubt it and would be fading any rally.
Longer term we have a falling Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicator. There is big support coming from the 200-day moving average. Look how well that worked in late September. Currently, the 200-day is at $152. A solid break of that and Nike stock will look to fill the gap created by earnings on June 24. That support is at $134. Failure to fill that gap will be a sign to get back in again, just like in late September.
Retracements are opportunities to identify a longer-term trend at play. A retracement that does not create a new significant low is obviously bullish. How to identify one is the tricky part. Given that this is a longer-term time frame, the trick is actually to be slightly late to the party and wait for confirmation.
NKE 1-day chart
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