Nike reported earnings for the quarter ending August 31, 2022 yesterday after market close. Revenues were $12.7 billion, up 4 percent YoY and up 10 percent on a currency-neutral basis. EPS for the quarter is $0.93, down 20% YoY. Inventories rose 44% to $9.7 billion in the latest quarter, and higher discounts and freight costs squeezed profit margins. Nike stock went down almost 13% today and closed at $83.12, which is near their pandemic low of $82.74.
Overall, I think Nike’s earnings for this past quarter is not bad considering all the headwinds such as the strong US dollar, drastic consumer behavior change and the China slump due to the zero-covid policy. These are exogenous factors which are out of their control. Well, this too shall pass. But of course given the current climate, investors punished the stock relentlessly and pushed it down to a price that I believe is long term investible. Their Enterprise Value / EBITA is around 17 and their revenue growth is around 10% on a constant currency basis. The stock is still not cheap but it’s also not super expensive compared to a year ago when it was $170. I am a Nike customer and I really love their products. If the stock comes down another 15-20%, I will just do it and buy some shares.