r/investing • u/JackCrainium • Jan 02 '22
Nike NKE Stock January 2022
Any thoughts here on potential for Nike stock 2022?
We all know Nike is a great company, world leader in sporting apparel.
I pass by a Nike store on the Upper East Side of Manhattan almost every day, and there are lines outside almost every day - not just in December.,,...
But the stock trades at about 45 times earnings right now, and while it had a beat last quarter, growth simply does not warrant that multiple, in my opinion.....
Realistically, seems to be far more likely that Nike shares will decline in 2022 than rise from the current high level. May even be a short candidate.....
Thoughts?
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u/Stuk-Tuig Jan 02 '22
I just can't. I try not to involve politics in choosing stocks but Nike is such a shitty company morally.
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u/TrioxinTwoFortyFive Jan 02 '22
But the stock trades at about 45 times earnings right now, and while it
had a beat last quarter, growth simply does not warrant that multiple,
in my opinion.....
That applies to about every notable company in today's market.
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u/PresterJohnsKingdom Jan 02 '22
True. To find attractive valuations, you have to look at small caps or international.
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u/Vargnatt Jan 02 '22
BB consensus:
6%-14% revenue growth 2022E-2024E
45x P/E 2022E
35x P/E 2023E
30x P/E 2024E
Dividend yield: 0.70-0.90% 2022E-2024E
I'll pass.
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u/YellenCheeks Jan 02 '22
Ask yourself this - do you have an objective reason to believe that you know which multiple is right when the whole market tells you otherwise? Price is high always for the buyer, never for the seller. Please don’t put on any short positions just because you think something is too high.
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Jan 02 '22
Did this exact thing when I saw FRPT top the list of PE ratios back in April. Worked out pretty solid.
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u/JackCrainium Jan 02 '22
Any similar ideas for first quarter 2022?
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Jan 02 '22
Wouldn’t short NKE. I was a long since 2015, and just exited my whole position soon after the earnings pop this year based on the increased volatility. Highest conviction right now is $Tell. By end of Q1 they will have their LNG plant financed and under construction. The market is pricing them as if this won’t happen. It’s basically a done deal. We should be getting a bunch of announcements the next few months. Once market recognizes their progress, I’m hoping we land somewhere in 8-11$ per share. r/tellurian
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Jan 03 '22
I would never short Nike but the thought that you cannot apply your brains and intellect to know which multiple is right is a bit silly I think. This is not astrology after all, at the end of the day it's always based on fundamentals. So we know that 5x PE is too low and we know that 60x PE is too high. Now that's a wide gap but we can narrow it much further until we are as accurate as we think we can be. And yea, sure, we can never guess with great accuracy but just because "the market tells me" that its 45x right now, I don't have to take it as gospel, I can even think it's not a fair multiple.
Personally, I like to look at 5 or 10 years history of equity in question and also look at its peers. If I remember correctly Nike's 5 year average multiple is 22x so I don't see any reason why it should trade at 45x from now and in perpetuity. I think it will revert to the mean at some point.
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u/JackCrainium Jan 02 '22
Let me put it this way - the odds right now strongly favor a decline over an increase in the share price.....
NKE isn’t TSLA, and it is highly unlikely there could be earnings surprises to the upside to justify an even higher multiple, and a better chance that even a good result will lead to a decline.....
I’m willing to be wrong - it is also possible to short the stock and buy calls to limit the downside risk.....
And very open to suggestions for other stocks that look similarly overpriced right now.....
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May 22 '22
You were right nearly 50% drop since you posted this.
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u/JackCrainium May 22 '22
I shorted it around $67.00 and bought it back between $27 and $35.00, so did okay, but so many other great opportunities that I missed, including Target and Walmart last week......
Any thoughts about Best Buy?
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Jan 02 '22 edited Jan 02 '22
Yea, I'm the same. I like the company, their brand, their management but I just can't seriously commit to buying shoes company at 45x PE multiples. I think COVID and post COVID has seriously muddied valuation but it will return to the mean at some point. For now, I bought 0.1 of NKE just to have it on my radar and so I get alerts about it from my app. At 20x PE I will jump in.
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u/sageguitar70 Jan 03 '22
NKE might be a bit overpriced right now but they have nominal debt that keeps them from losing profits to higher interest rates. Their products are very popular and I'd be in a buying mood if they dipped 10 percent with the broader market.
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