What Hedge Funds Expect Nike To Report Thursday

| About: Nike Inc. (NKE)

Nike (NYSE:NKE) has experienced incredible stock growth throughout the bull market of 2013. The American multinational designer and manufacturer of athletic apparel and equipment has seen its stock rise over 40% since January. The last time Nike announced earnings in September it crushed analyst expectations on both EPS and revenue and the stock price jumped up nearly 6.4%.

Nike is expected to report FQ2 2014 earnings on Thursday, December 19th. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.image

The current Wall Street consensus expectation is for NKE to report 58 cent EPS and $6.442B revenue while the current Estimize consensus from 13 Buy Side and Independent contributing analysts is 61 cent EPS and $6.499B revenue.

The Estimize consensus is more accurate than Wall Street up to 69.5% of the time because it represents unbiased market expectations. By tapping into a wider distribution of over 3,300 contributors including hedge fund and independent analysts as well as students and non professionals, Estimize is better able to capture the true market outlook. Over the past six quarters the Estimize community has been more accurate than Wall Street in forecasting Nike's EPS five out of six times.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we're seeing a smaller differential between the Estimize and Wall Street numbers compared to previous quarters.image

Over the past four months the Wall Street consensus trend for EPS has dropped from 61 cents to 58 cents while Wall Street revenue expectations have increased from $6.421B to $6.442B. The Estimize EPS consensus is where it began at 61 cents and the revenue consensus has fallen from $6.516B to $6.499B


The distribution of estimates published by analysts on Estimize range from 59 cent to 68 cent EPS and $6.448B to $6.675B in revenues. Interestingly, this quarter each contributing analyst is expecting Nike to beat Wall Street on both EPS and revenue. Additionally we're seeing a larger distribution of estimates this quarter for NKE than normal. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.image

The analyst with the highest estimate confidence rating this quarter is anmikyoso who projects 59 cent EPS and $6.455B in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the analyst with the top confidence rating is making a call that is more bearish than the majority of our community.

This quarter there is a clear discrepancy between the sell-side estimate numbers and what buy-side analysts and independents are forecasting. All of the data submitted to the Estimize platform suggests big numbers out of Nike's earnings report on Thursday.

Disclosure: None.