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Transcript

  • 1.  
  • 2. NIKE
  • 3. Presentation Outline
    • Snapshot
    • Brief Overview
    • Financial Statements
    • Industry Comparison
    • Current News
    • Technical Analysis
    • Trend Analysis
    • Eval
    • Summary of Valuations
    • Analysts Recommendations
    • Risk
    • Investment Recommendations
  • 4. Snapshot .83 Beta $75.10 52wk Low $92.43 52wk High $84.11 Recent Stock Price NKE Ticker Symbol 21.738 billion Market Cap. Footwear Industry Consumer Cyclical Sector
  • 5. Brief Overview
    • NIKE’s principal business activity is the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory product
    • The largest seller of athletic footwear and athletic apparel in the world
    • Distributed in over 160 countries around the world
    • Sell under the NIKE brand, wholly owned subsidiary Converse, Cole Haan, g Series, Bragano, Hurley, NIKE Hockey, and Exeter brands
    • Main competitors have joined with the recent announced acquisition of Reebok by Adidas
  • 6. Overview
    • Nike’s best year was last year.
    • The US accounts for 46% of revenues.
    • Market Cap doubled in 1 year, mostly due to the growth in US footwear sales.
    • Internet market share makes buying shoes easy.
    • No such thing as bad publicity.
  • 7. Financial Statements
    • Sales growth has consistently grown over the last four years
      • 4.3% in 02’ 8.1% in 03’ 14.5% in 04’ 12.1% in 05’
    • Increase in Gross Margin from 39%-45%, however this is not likely to continue to grow in future years
    • Red Flags…
  • 8. Industry Comparison 4.49 7.33 22.71 19.07 14.55 4.07 1.49 2.31 17.33 Industry 13.02 10.39 18.96 11.46 7.62 1.71 2.76 1 19.63 S&P500 8.53 6.60 14.3 9.95 7.45 2.91 1.21 1.12 17.38 Sector 1.61 Price to Sales 1.92 Current Ratio 17.09 P/E 19.98 ROI 15.25 ROA 24.04 ROE .64 Beta 6.26 Receivable Turnover 4.44 Inventory Turnover NKE Ratio
  • 9. Current News
    • England just banned the use of a chemical that is used in the production of leather shoes. The affects on NIKE have yet to be determined.
    • Adidas announce its acquisition of Reebok. These are the two biggest competitors, who when combined, will be roughly the size of NIKE.
  • 10. Technical Analysis
    • Support level 76 dollars per share
    • Resistance level approximately 92 dollars a share
    In the last Year…
    • Last 5 years…
    • Support level at 39 dollars a share
  • 11. Technical Analysis Continued…
    • In line with its 200 day moving average
    • Has tended to less volatility over the last 2-3 years
  • 12. Trend Analysis
  • 13. Inventory Trends
  • 14. Leverage Analysis
  • 15. Operating Cash Flow
  • 16. Revenue Breakdown
  • 17. EVal
  • 18. Summary of Valuations
  • 19. Analysts Recommendations
    • Analysts have a price target between 95-110 dollars depending on one or two year return
    • Consensus recommendation is OUTPERFORM
    • Mean rating is a 1.84, down from a 2.06 two months ago
  • 20. NIKE Risk
    • Risk Grade – 103 (Max 134)
    • Over 3/4 of all stocks available are more risky than NIKE
  • 21. Risk Cont’d
  • 22. Portfolio with NIKE
    • Risk Grade of 60 vs. current risk grade of 62
    • An analysis of our current portfolio labels consumer discretionary as the most underweight sector compared to the benchmark
    • Interesting Facts:
      • Nike NEVER made an offer to buy Under Armor
      • They had Nike Shocks well before they were sold in store but decided to hold sale until Michael Jordon retired and his shoe line lost popularity
  • 23. Investment Recommendations
    • Positive: Company has strong potential if it can tap into the foreign markets (China and International Soccer). A purchase of 65 shares would account for 4.65% of the portfolio and would have a market value 5,382 dollars.
    • Negative:
      • Right now too much stress is put on the strength and growth of the US Footwear sector.
      • The abroad sector that is expected to grow contributes a low percentage of overall revenue. However, this does leave room for rapid growth and expansion.
      • The company has doubled its market cap. over the last five years and has seen a very wide trading range between 50 and 90 dollars.

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