Earnings: Can Nike Beat Expectations Again?

| About: Nike Inc. (NKE)

Summary

NKE has beat analysts’ profit estimates in the last 15 quarters.

Analysts are estimating a per-share profit of $0.48, a penny decline from year-ago results.

Short-term options traders have priced in a potential 4% share price move in either direction around the earnings release.

Nike (NYSE:NKE) opens its fiscal Q4 books after the bell Tuesday and, with its stock down 16% since the beginning of the year, investors will be carefully listening to what the athletic shoe and sportswear company has to say.

NKE, a major company involved in this summer's Olympics in Rio, has been competing with other big performers in the athletic sports-gear market like Under Armour (NYSE:UA) and Adidas (OTCQX:ADDYY). Like these competitors, NKE might also feel the fallout from the bankruptcy closing of Sports Authority.

NKE has beat analysts' profit estimates in the last 15 quarters. The company said on last quarter's conference call that it was expecting to see revenue growing in mid-single digits for Q4 and the full fiscal-year.

But that doesn't appear to be helping profits, according to some analysts. Those reporting to Thomson Reuters are estimating a per-share profit of $0.48, a penny decline from year-ago results. Revenue is projected to rise to $8.3 billion from $7.8 billion a year ago.

Short-term options traders have priced in a potential 4% share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® trading platform by TD Ameritrade.

Ahead of earnings, some traders were active in the monthly 55- and 57-strike calls. On the put side, the weekly 53-strike puts saw some activity. Implied volatility is relatively high at the 70 th percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

Figure 1: NKE Trending Lower Ahead of Earnings. NKE has traded lower in the last quarter and fell Friday and Monday, along with the broader market. Chart source: thinkorswim® by TD Ameritrade. Data source: CBOE. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.