Biding your time may yield a good buying opportunity Real Money Columnist Stephen ‘Sarge’ Guilfoyle argues.
A top athletic apparel and equipment maker had reasonable financial results, but has seen its shares slump this year as covid has emerged in a key market.
But Real Money Columnist Stephen “Sarge” Guilfoyle is watching closely.
The company is Nike (NKE) – Get NIKE, Inc. Class B Report. The market is China.
“I’m impressed with the quarter’s performance,” Guilfoyle wrote recently on Real Money. “The firm did say during the call that the impact from China’s lockdowns is unclear. I take that as they need to see if China is going to rebound the way that they hope. If Nike is not sure, neither am I.”
Nike reported GAAP EPS of $0.87 on revenue of $10.87 billion for the three month period ending February 28, which beat Wall Street estimates. Earnings growth fell by 3.3% on revenue growth of 4.9%, but analysts had anticipated a lower volume of sales due to issues in supply chains and Covid lockdowns in Asia where Nike manufactures its goods.
Its shares have been in a funk all year, losing more than 20% from their recent highs in late 2021.
In addition, the athletic footwear, apparel and equipment behemoth said it can not provide guidance on sales and earnings for fiscal 2023.
Given that, some investors may choose to wait to buy shares of Nike, Guilfoyle wrote.
“I don’t see anything wrong with buying a few shares of NKE given that the firm expects to be prepared to offer specific guidance in three months,” he wrote. “I do believe however, that a better entry point might be had by waiting.”
Historically, Nike has been good to its shareholders and increased its dividend payout for 20 consecutive years. The yield is low at 0.94%, but Nike returned $1.7 billion to its shareholders. The apparel maker also repurchased $1.2 billion of common stock during the quarter and retired eight million shares.
The company authorized a four-year $15 billion repurchase program in June 2018.
