Nike Earnings on Deck With Stock (NYSE: NKE) Red YTD

Nike's stock (NYSE: NKE) is back under water through 2025, down 1.09% on the year as the global sportswear giant prepares to release its fiscal third-quarter 2025 earnings report after today's closing bell. The stock, currently trading at $73.01, has experienced a difficult year, down 27% over the past 12 months and significantly below its 52-week high of $101.92.

This decline reflects a range of factors, including increased competition, weakening demand, particularly in North America, and broader macroeconomic uncertainties.

The upcoming earnings report is highly anticipated, with analysts forecasting a year-over-year decline in both sales and profits. Consensus estimates project revenue to land around $11.02 billion, a significant drop from the $12.43 billion reported in the same quarter last year. Earnings per share (EPS) are expected to drop to $0.28, down from the prior years results. Despite these grim projections, some analysts, like those at Morgan Stanley, see a potential for slight outperformance in EPS, though many are opting to remain cautious.

Nike's recent performance has been a mixed bag. In its fiscal Q2 2025 (ended November 30, 2024), the company beat EPS estimates by a notable 16.62%, reporting $0.78 compared to the expected $0.67. Revenue also slightly exceeded expectations, reaching $12.35 billion. However, the previous quarter (Q1 2025) saw diluted EPS down 26% and revenues down 10% year-over-year. These fluctuating results highlight the volatility Nike is currently navigating.

At the heart of Nike's current challenges and potential future success lies the strategic turnaround plan spearheaded by CEO Elliott Hill, who took the helm in October 2024. Hill is focused on restoring a “balance” to Nike's sales strategy, emphasizing both its direct-to-consumer (DTC) channels, such as Nike.com and the SNKRS app, and strengthening relationships with wholesale partners. This approach aims to address concerns that Nike had become overly reliant on its DTC strategy, potentially alienating key retail partners.

Elliott Hill, Nike's new CEO, plans to restore balance by strengthening both Nike Direct and wholesale partnerships. In the Q2 earnings call, Hill outlined a bold plan to reposition Nike for long-term success, with a focus on innovation, brand storytelling, and wholesale partnerships.

Analyst sentiment towards Nike is decidedly mixed, as evidenced by a high of $120 set against the low PT of $49. While the consensus leans towards a “Moderate Buy” or “Buy,” a wide range of price targets underscores the uncertainty surrounding the company's near-term prospects. The current consensus analyst price target is $85.25.

Investors will be keenly listening to management's commentary on the earnings call, seeking clarity on the execution of Hill's turnaround strategy, insights into the competitive environment, and any guidance on future performance. With a P/E ratio (TTM) of 22.14 and a dividend yield of 2.17%, Nike still presents a potentially attractive long-term play, but the near-term outlook remains clouded by uncertainty. The Q3 earnings report will be a crucial test of whether Nike can regain its footing and chart a course back to sustainable growth.