$NKE - Part B
Good evening friends,
Yesterday we wore the bad cop's uniform and detailed all the problems Nike brought upon investors.
Today we will wear the good cop's uniform to balance the story and take you behind the scenes where you can get another perspective on the picture!
So let's begin!
It's no secret that Nike is the strongest apparel brand there is and is considered the 'Coca-Cola' of the apparel world.
It's also no secret that recently the stock has seen significant declines, reaching a 52-week low a few days ago.
But... there are those who are interested in it precisely because of the difficulties, and precisely at this time.
And to most people's surprise, you probably know these interested parties - today we will reveal them!
But just before that - a short brief on Nike:
Nike is a globally recognized brand with a dominant position in the sportswear and footwear market - this brand strength translates, among other things, into a loyal customer base. (Do you know anyone who doesn't have Nike in their closet?)
All your favorite athletes in your favorite sport probably wear Nike.
And yes - despite lowered expectations, Nike has consistent revenue growth!
Nike has a track record of stable revenue growth driven by the expansion of its product lines and geographical markets.
The company has plans to continue doing so in the future with more apparel in more developing markets worldwide - we will elaborate:
Nike is constantly expanding its presence in 'emerging markets' - such as China and India, these regions offer significant growth potential due to increasing disposable income and a growing middle class.
They are also constantly discussing expansion into other emerging markets.
In addition - anyone who has recently visited Nike stores has noticed innovation and new product development:
Nike consistently innovates its product lines, offering innovative designs and technology in footwear and apparel.
This maintains the brand's relevance and is designed to attract a broad consumer base.
And most importantly - a new CEO has arrived in town!
Nike is getting a new CEO who started at Nike 36 years ago as an intern and climbed all the way to the top.
He loves the brand, served in 19 different key roles - and understands the business well - he was hand-picked by the board as nothing less than a 'lifeline'. (Remember the board... we'll get back to them today)
Nike doesn't miss out on major sporting events either!
With the Super Bowl and other major sporting events just around the corner - Nike stands to profit greatly - with the athletes they signed who wear Nike shoes and apparel and promote their brand worldwide before hundreds of millions of people!
Every major sporting event benefits Nike because Nike - that's usually what athletes wear...
But what about the financial aspects?
Every CEO knows that the biggest internal combustion engine of a business is free cash flow!
Fortunately, and despite everything, Nike has increased its free cash flow at a fairly consistent rate over the past two decades, and several respected analysts estimate that it is likely to continue this trend. (for example, BofA Securities and Deutsche Bank, which recently updated their price targets for Nike stock to $84 and $90)
And yes, despite the difficulties - Nike has a strong history of dividend growth - alongside the growth in free cash flow - Nike also has a strong history of paying and increasing its dividend to investors.
They have increased the dividend at a double-digit annual growth rate even in the last 5 years!
And speaking of dividends - let's move on to Nike's balance sheet:
Nike has cash and bonds roughly equal to the size of its debt.
This allows it to spend more cash on buybacks and dividends as it doesn't have to worry about a large debt it can't pay.
Wait! - We're definitely not done here!
Due to space constraints - the rest of the information about Nike, the investors who recently opened a position in the company, the board members who recently purchased shares, and what the technical analysis says - will be published later - in Part C and the final part!