NKE – Market expectations are for improving Uniform ROA, but management’s concerns about margins and revenues imply this may be unwarranted

• Nike, Inc. (NKE:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 23.1x Uniform P/E, implying bullish expectations for the firm. However, given management’s concerns about margins and revenues, this may be unwarranted
• Specifically, management appears concerned about expected declines in North American revenues, weakness in EMEA revenue growth, and the sustainability of revenue growth in their APLA geography. They also appear concerned about the potential for further gross margin contraction. Should the firm fail to drive Uniform Margins to record-highs, as management sentiment suggests, multiple compression and equity downside would be warranted