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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 Sector Consumer Cyclical Industry Footwear Market Cap. 21.738 billion Ticker Symbol NKE Recent Stock Price $84.11 52wk High $92.43 52wk Low $75.10 Beta .83
  • 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 Ratio NKE Industry Sector S&P500 P/E 17.09 17.33 17.38 19.63 Beta .64 2.31 1.12 1 Price to Sales 1.61 1.49 1.21 2.76 Current Ratio 1.92 4.07 2.91 1.71 ROA 15.25 14.55 7.45 7.62 ROI 19.98 19.07 9.95 11.46 ROE 24.04 22.71 14.3 18.96 Receivable Turnover 6.26 7.33 6.60 10.39 Inventory Turnover 4.44 4.49 8.53 13.02
  • 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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