With the growth of PSE and more, NIKE (NYSE: NKE) is interesting
Some have more money than common sense, they say, so even businesses with no income, no profit, and a record of failure can easily find investors. But as Peter Lynch put it in One Up on Wall Street, ‘Long shots hardly ever pay off.’
In the age of investing in the blue sky of tech stocks, my choice may seem old-fashioned; I always prefer profitable businesses like NIKE (NYSE: NKE). Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake the appreciation of the profitability of the company itself. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
How fast is NIKE growing?
The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). Therefore, there are a lot of investors who like to buy stocks in companies with growing EPS. Who among us wouldn’t applaud NIKE’s 44% annual stratospheric BPA growth, compound, over the past three years? Such rapid growth may well be fleeting, but like a lotus blooming from a cloudy pond, it arouses the joy of suspicious value-gatherers.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of how well the business is growing. NIKE shareholders can be confident that EBIT margins are up 9.3% to 16% and revenues are increasing. It’s great to see, on both counts.
The chart below shows how the company’s bottom line has progressed over time. Click on the graph to see the exact numbers.
NYSE: NKE Profit and Revenue History October 1, 2021
Fortunately, we have access to the forecasts from NIKE analysts. future profits. You can make your own predictions without looking, or you can take a look at what the pros are predicting.
Are NIKE Insiders Aligned With All Shareholders?
Since NIKE has a market cap of US $ 230 billion, we don’t expect insiders to own a significant percentage of stocks. But we are reassured by the fact that they are investors in the company. Indeed, they have invested a sparkling mountain of wealth, currently valued at US $ 45 billion. This equates to 20% of the company, which makes insiders powerful and aligned with other shareholders. It may be my imagination, but I feel the glimmer of an opportunity.
Does NIKE Deserve A Place On Your Watchlist?
NIKE profits took off like any random cryptocurrency, in 2017. This BPA growth has certainly caught my attention, and the large insider ownership only serves to pique my interest further. Sometimes rapid growth in BPA is a sign that the business has reached an inflection point; and I like those. So yeah, on this short review, I think it’s worth considering NIKE for a place on your watch list. We don’t want to rain too much on the parade, but we also found 1 warning sign for NIKE that you need to be aware of.
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider dealing discussed in this article refers to reportable trades in the relevant jurisdiction.
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