A month has gone by since the last earnings report for Nike (NKE). Shares have added about 0.4% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Nike due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for NIKE, Inc. before we dive into how investors and analysts have reacted as of late.
NIKE Q4 Earnings Beat Estimates, North America Revenues Up 3%
NIKE reported fourth-quarter fiscal 2026 results, wherein earnings per share (EPS) and revenues beat the Zacks Consensus Estimate. The company’s EPS of 20 cents increased 42.9% from the year-ago level and beat the Zacks Consensus Estimate of 11 cents. Revenues dipped 1% year over year to $10.97 billion but surpassed the Zacks Consensus Estimate of $10.85 billion. The upside was aided by wholesale growth and increased revenues in North America.
NKE’s Revenue Picture for Q4
NIKE’s fourth-quarter revenues fell 4% on a currency-neutral basis. Revenues for the NIKE Brand were $10.72 billion, flat on a reported basis and down 3% on a currency-neutral basis. The weakness was mainly due to declines in Greater China and EMEA, somewhat offset by growth in North America.
Wholesale revenues increased 4% on a reported basis and 1% on a currency-neutral basis to $6.6 billion. Growth was mainly driven by North America, partly offset by lower revenues in Greater China. NIKE Direct revenues declined 7% on a reported basis and 9% on a currency-neutral basis to $4.1 billion. The drop was due to a 12% decline in NIKE Brand Digital and a 7% fall in NIKE-owned stores.
NIKE’s Segment Trends Stay Mixed
North America revenues rose 3% year over year to $4.83 billion. Footwear increased 4% to $3.23 billion, apparel rose 1% to $1.31 billion and equipment slipped 1% to $292 million.
EMEA revenues fell 1% on a reported basis and 6% on a currency-neutral basis to $2.98 billion. Footwear declined 4% to $1.82 billion, while apparel rose 6% to $982 million and equipment dropped 3% to $172 million.
Greater China remained under pressure, with revenues down 12% on a reported basis and 17% on a currency-neutral basis to $1.30 billion. Footwear fell 13% to $938 million, apparel declined 10% to $334 million and equipment dropped 17% to $25 million.
APLA revenues increased 1% on a reported basis but were down 1% on a currency-neutral basis to $1.60 billion. Footwear remained flat at $1.1 billion, apparel rose 6% to $420 million and equipment dipped 2% to $62 million.
Converse revenues dropped 32% on a reported basis and 34% on a currency-neutral basis to $244 million due to decreases in all territories.
NKE’s Costs and Margins
Gross profit rose 21% year over year to $5.39 billion. The gross margin expanded 890 basis points (bps) to 49.2%, primarily due to a 900-bps benefit with respect to the recovery of IEEPA tariffs. Excluding this benefit, management said the gross margin would have been 40.2%, down 10 bps year over year.
Selling and administrative expenses fell 2% year over year to $4.08 billion. As a percentage of sales, SG&A expenses were 37.2%, down 20 bps from 37.4% in the year-ago quarter. Demand creation expenses dipped 4% to $1.20 billion, mainly due to lower brand marketing expenses. Operating overhead expenses fell 1% to $2.88 billion, aided by a decline in other administrative costs.
NIKE’s Financial Position
NIKE ended fiscal 2026 with cash and equivalents of $7.56 billion, up 1% year over year. Short-term investments were $1.46 billion, down 13% from the year-ago period. As of May 31, 2026, the company had long-term debt (excluding current maturities) of $5.94 billion and shareholders’ equity of $14.87 billion.
Inventories were $7.50 billion at the end of fiscal 2026, flat year over year. In fiscal 2026, the company returned nearly $2.5 billion to shareholders through dividends and share repurchases. It paid $2.4 billion in dividends, representing a 5% increase from the prior year. Additionally, the company repurchased 1.8 million shares for $123 million under its four-year, $18 billion share repurchase program.
NKE’s Outlook and Key Priorities
Management said the operating environment remains volatile, citing evolving tariff policies, Middle East disruption, oil prices, operating costs, consumer behavior and weaker store traffic and retail sales. For the first quarter of fiscal 2027, NIKE expects reported revenues to decline in the low to mid-single digits, with Q2 having a sequential deceleration from Q1. It expects gross margin expansion earlier beginning in the fiscal first quarter. The company expects no foreign exchange benefit, with currency-neutral revenue trends consistent with recent performance.
The gross margin is expected to be slightly positive in the first quarter. The forecast assumes incremental tariff rates of 10% through the end of July and 15% thereafter. SG&A dollars are expected to be flat in the fiscal first quarter. Operating overhead is expected to decline, while demand creation is likely to grow in high single digits as the company invests in the World Cup. It is taking actions to improve EBIT margins and increase cash flow from operations.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Nike has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nike has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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NIKE, Inc. (NKE): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).