Nike Stock Looks Attractive At $160
Nike’s stock (NYSE: NKE), a company designing, developing, and marketing footwear, apparel, equipment, and accessory products, has declined marginally in the last month (twenty-one trading days) to levels near $160 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for NKE stock average around 2.4% in the next one-month (twenty-one trading days) period after experiencing a fall of 2.4% during the last week. But how would these numbers change if you are interested in holding NKE stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis machine learning engine NKE stock chances of a rise. You can see the chance of recovery over different time intervals of a quarter, month, or even just one day!
In FY 2021 (ended May 31), Nike’s NKE revenue jumped by 19% year-over-year (y-o-y) to $44.5 billion, with the U.S. reporting record totals, up 140% y-o-y for the fourth quarter alone. Also, the company’s growth in China saw its seventh consecutive year of double-digit growth in FY’21. In addition, Nike’s digital advantage is one of the biggest assets that provide the edge it needs to keep growing. In fact, the sports footwear and apparel company’s digital business accounts for 35% of its total revenue, which is more than three years ahead of its plan. Looking at the balance sheet, the company ended FY’21 with strong liquidity, holding cash, and a short-term investment position of $13.5 billion, up from a mere $9.5 billion in FY’20. Having said that, the company’s phenomenal financial performance and growth opportunities in the digital business and international markets – make the stock look attractive even at current levels.
MACHINE LEARNING ENGINE – try it yourself:
IF NKE stock moved by -5% over five trading days, THEN over the next twenty-one trading days, NKE stock moves an average of 4.0%, with a 63% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of NKE Stock Movements:
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Question 1: Is the average return for NKE stock higher after a drop?
Answer: Consider two situations,
Case 1: NKE stock drops by -5% or more in a week
Case 2: NKE stock rises by 5% or more in a week
Is the average return for NKE stock higher over the subsequent month after Case 1 or Case 2?
NKE stock fares better after Case 1, with an average return of 4.0% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.3% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how NKE stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Nike stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For NKE stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for NKE stock after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
Nike’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Nike’s stock by changing the inputs in the charts above.
It is also helpful to see how its peers stack up. NKE Stock Comparison With Peers shows how Nike compares against peers on metrics that matter.
See all Trefis Featured Analyses and Download Trefis Data here