Is the NIKE Stock a Wise Investment Ahead of Its Q4 Earnings?

NIKE Inc. NKE is slated to release fourth-quarter fiscal 2025 results on June 26. The leading sports apparel retailer is estimated to have witnessed year-over-year declines in the top and bottom lines in the fiscal fourth quarter.The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $10.7 billion, suggesting a 15.4% decline from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at 11 cents per share, indicating a decline of 89.1% from the year-ago reported number. Earnings estimates for the fiscal fourth quarter were unchanged in the last 30 days. (See the Zacks Earnings Calendar to stay ahead of market-making news.)In the last reported quarter, the company delivered an earnings surprise of 92.9%. Its bottom line beat the consensus estimate by 42.5%, on average, in the trailing four quarters.Earnings WhispersOur proven model conclusively predicts an earnings beat for NIKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.NIKE has an Earnings ESP of +41.47% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.What is in Store for NKE in Q4 Earnings?NIKE's fourth-quarter fiscal 2025 results are expected to reflect ongoing challenges, including weak lifestyle product sales, sluggish digital revenues, and headwinds in Greater China and certain EMEA markets. These factors are expected to have contributed to slower revenue growth and margin pressure in the to-be-reported quarter.The lifestyle segment, comprising men's, women's and the Jordan lines, has been facing persistent struggles, particularly in digital channels. Macroeconomic factors like inflation and rising interest rates have curbed discretionary spending, posing difficulties for premium brands in North America. Recent trends reveal that the company has been experiencing considerable shifts in consumer traffic in Greater China, with declines in brick-and-mortar traffic and lower sell-through rates. While NIKE has moderated its near-term expectations for the region, management has been optimistic about its long-term market position.On the last reported quarter’s earnings call, NKE provided a cautious fiscal fourth-quarter outlook, citing the expected impacts of new tariffs on imports from China and Mexico. Management anticipates the fiscal fourth quarter to reflect the peak effects of its ‘Win Now’ strategy, with revenue and margin pressures beginning to ease. The company has been facing ongoing external uncertainties, including geopolitical tensions, tariffs, currency fluctuations and evolving tax regulations. Additionally, macroeconomic volatility and its effect on consumer confidence have been concerning.For fourth-quarter fiscal 2025, NKE expected a revenue decline in the mid-teens, though at the lower end, due to North American shipment timing and foreign exchange headwinds. The gross margin is projected to drop 400-500 bps, indicating the impacts of prior-year restructuring charges. SG&A expenses are forecast to rise in the low to mid-single digits, including last year’s restructuring charges. The company continues to manage expenses while investing in ‘Win Now’ initiatives, particularly in demand creation.Our model projects the gross margin to decline 450 bps to 40.2% for fourth-quarter fiscal 2025. We predict SG&A expenses of $4.2 billion for the quarter, suggesting a 2.4% year-over-year decline. As a percentage of sales, SG&A is anticipated to increase 690 basis points to 39.3%.NIKE, Inc. Price and EPS Surprise  NIKE, Inc. price-eps-surprise | NIKE, Inc. QuoteHowever, NKE’s strategic pricing and supply-chain optimization, including logistics, inventory management and distribution, are expected to have cushioned the bottom line in the to-be-reported quarter. Effective inventory management strategies have been other critical components of NIKE's success.The company continues to prioritize sports performance, accelerating product innovation and storytelling to enhance brand appeal. With innovations like the Pegasus Premium, Vomero 18 and Air Max platforms, alongside a more segmented and differentiated wholesale strategy, NIKE is positioning itself for sustainable growth by catering to evolving consumer preferences and expanding its market reach across key global regions. NIKE expects these innovations and its focus on the sports performance product category to have supported its fiscal fourth-quarter performance.NKE is revitalizing its digital and retail strategy by reducing promotions, improving premium brand positioning and refining its go-to-market processes. By strengthening partnerships with wholesale retailers and optimizing its NIKE Direct ecosystem, the company is creating a more seamless and engaging shopping experience, ultimately driving margins and brand loyalty.NIKE’s Price Performance & ValuationNKE shares have exhibited a downward trend, shedding as much as 38.5% in the past year. The stock has lost against the broader Consumer Discretionary sector and the S&P 500’s growth of 13.9% and 9.3%, respectively. The NKE stock has also underperformed the industry’s decline of 35.6% in the same period.NIKE's performance is notably weaker than that of its close competitors, including Wolverine World Wide WWW, which has risen 23.7% in the past year. NKE has also underperformed Skechers SKX and Adidas’ ADDYY declines of 15.6% and 4.5%, respectively, in the same period.NKE’s 1-Year Stock Performance Image Source: Zacks Investment Research At the current price of $59.79, NIKE trades 14.4% above its 52-week low of $52.28. The current price trades 39% below the 52-week high mark of $98.04.Despite this recent downturn, NKE’s valuation appears quite pricey. The company trades at a forward 12-month P/E multiple of 30.81X, exceeding the industry average of 24.3X and the S&P 500’s average of 21.71X. Image Source: Zacks Investment Research Given the premium valuation, investors can face significant risks if the company's future performance does not meet expectations. The Consumer Discretionary market is becoming increasingly competitive and NIKE’s initiatives may not be sufficient to drive significant growth. Macroeconomic challenges and heightened competition can impede the company's ability to sustain its current growth trajectory.Investment ThesisNKE’s strategic initiatives build a strong foundation for long-term growth by strengthening its competitive position, expanding its product lineup and deepening consumer engagement. With a focus on innovation, improved retail and digital strategies, and premium brand positioning, NIKE is adapting to the market shifts while maintaining leadership in sports and lifestyle apparel.While these efforts are expected to create long-term value, they are expected to lead to some short-term revenue challenges. The weaker guidance for the fourth quarter of fiscal 2025 dampens near-term growth prospects. Also, its near-term challenges in lifestyle products and Greater China cannot be ignored.ConclusionAs NIKE stands on the cusp of its fourth-quarter fiscal 2025 earnings, its unrivaled market leadership, athlete-driven storytelling, and broadening product portfolio underscore a compelling long-term growth narrative. The company’s strategic focus on accelerated innovation, diversified offerings and a strengthened retail and digital ecosystem positions NIKE to capture shifting consumer trends and drive sustainable shareholder value across key global markets.However, near-term headwinds, most notably in the lifestyle segment, ongoing Greater China challenges, and the complex task of realigning inventory, warrant a measured stance on the stock. Investors will do well to gauge how effectively NIKE stabilizes sales, preserves margins, and navigates its digital and international transitions before making fresh commitments. For current NKE shareholders, maintaining one’s position through the upcoming report may offer the clearest line of sight into the company’s operational progress and strategic trajectory.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. 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(WWW): Free Stock Analysis Report Adidas AG (ADDYY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks