Recently reported quarterly earnings, many investors are looking for a fair sized rally for the shoe maker king. However, with regard to the imminent recession and the consequences for Nike's shares, I was willing to buy more such shares at such a high price during such a volatile period.
It is true that Nike made a positive report a few days ago, which pushed the stock four percent next day. However, this was the first time in three quarters when Nike reported lower EPS than expectations. While the surprise was low, Nike generally had a much higher income than analysts' estimates, which shows that Nikes's profits may decline in the next few years. In the fourth quarter, it is already experiencing a negative benefit, and yearly margins are at best mediocre, Nike seems to be outrageous in the coming months for investors. Getting close to a record high this year can guarantee that Nike is an overpayment of fairness, which is a matter of expectation.
Such a wording is based on Nike's type of company. The sale of sports shoes and other apparel at the market price above can not be satisfied with consumers due to the economic downturn. As the Federal Reserve has raised interest rates due to inflation concerns, there may be a negative impact on companies such as lower purchases. Consequently, companies need to compensate for sales shortages by shooting employees. This results in lower domestic income for Americans, which has even more negative impacts on the economy. As consumers do not spend on the previous exchange rate, profits will drop for companies that sell their products at a high price (such as Nike) and outperform bad news for stockholders. Since Nike fits perfectly with this description, wait a few more in the future, especially if you have a hard landing and guidance.
During the recession in 2001 and 2003, Nike's share dropped dramatically by nearly 33%, which is a major downturn for large businesses. When the economy became more and more prosperous, Nike's share increased due to the increase in margins and revenues, and Nike was close to 100% higher than the end of 2003. Nike would follow a similar pattern during the next recession. The subject is debatable, but Nike follows a relatively cyclical pattern between the economy and its fundamentals.
It is true that Nike's excellent PE ratio is close to 17, and a good dividend payment of 1.24 cents per share, but the economy that hit Nike's fundamentally disadvantageous economy and a technical pattern similar to its cyclical inventory would be very cautious about buying Nike shares at the present time . If you were lucky and bought the shares of Nike earlier, I would suggest selling these stocks, collecting your capital gains and buying Nike shares when the economy goes through the recession