February 5, 2018

NKE – Market expectations are for improving Uniform ROA, but management has concerns about their investments and growth outlook


    • Nike, Inc. (NKE:USA)¬†currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 29.0x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about investments and their growth outlook
    • Specifically, management may lack confidence in their investment in Air Max Day, and may be exaggerating the success of their investments in digital. Additionally, they may be overstating the potential they see for connected NIKE products, and may be exaggerating the benefits they are seeing from membership. Moreover, they may lack confidence in their innovation scaling efforts, and may have concerns about the sustainability of international growth
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