As Dow Jones stock Nike prepares to release its quarterly results after the markets close on Tuesday, many are wondering if it’s a good time to invest in the sneaker giant. Despite a lackluster earnings report for the fiscal fourth quarter, there are signs that point to the athletic conglomerate rising high into 2020.
Swoosh! Investors just buying Nike ahead of tomorrow's earnings report after the closing bell. $NKE up 1.5% today and nearly 20% YTD. Not far from its all-time high.
— Paul R. La Monica (@LaMonicaBuzz) September 23, 2019
What Trade War?
The ongoing trade battles between China and the U.S. factor into every investor’s decision. With Nike though, this seems to be less of a factor. Five-star investor Mark Drbul told Yahoo! Finance that Nike is “one the best-positioned companies to navigate the current environment.”
The company’s Chinese revenue has more than tripled over the past 10 years. Nike’s Greater China revenue rose 15.6% in the last quarter to $1.7 billion. In fact, the Greater China division has grown by double-digits for the 20th consecutive quarter.
Following its fiscal fourth-quarter results, Nike CEO Mark Parker said that his company has been unaffected by the trade war.
“We have not seen any impact on our business to date, and we continue to see strong momentum as we enter fiscal year 2020.”
“We are, and remain, a brand of China, for China.”
Nevertheless, even Nike feels the tension. The U.S. imported over $11 billion of footwear from China last year. This prompted over 170 shoemakers, including Nike, to send President Trump a letter to consider halting tariffs.
Nike’s Innovation Will Propel It Forward
Nike didn’t become the largest shoemaker in the United States by luck. It’s always taken an innovative path. Their latest move should not only help the environment but also broaden their appeal to the growing population concerned about climate change.
The company announced its “Move to Zero” campaign last week, which is designed to “help protect the future of sport.” The initiative aims to power Nike facilities with 100% renewable energy by 2025 and to operate with net-zero emissions. With shoe-recycling program Nike Grind already in place, environmentally conscious consumers can feel confident with the company.
Nike has opened a new distribution center in Ham, Belgium, that’s powered entirely by renewable energy – the latest milestone in the company’s move to zero carbon and zero waste to help protect the future of sport.https://t.co/zh3sgrftYx#renewables #nike #energy #solar #wind pic.twitter.com/3nvvN1CUmH
— NES Fircroft (@NESFircroft) September 17, 2019
In an effort to grow its digital division and predict consumer behavior, Nike has been buying technology firms left and right. They purchased AI data-analytics startup Celect in August. They bought consumer-analytics firm Zodiac last year and acquired computer-vision company Invertex in April. These acquisitions show that the retail giant fully intends to transition smoothly into the digital age.
With a high profile at major events like the Women’s World Cup and the upcoming 2020 Tokyo Olympics, Nike should have no trouble staying in the minds of consumers. With generally bullish predictions from top analysts, Nike looks like a strong choice this fall.