Nike Inc (NYSE: NKE) has been one big disappointment after another in recent years – and Josh Brown, a renowned investor and chief executive of Ritholtz has even lost conviction in its ability to recover.
The sportswear and performance brand is scheduled to report its financials for the fourth quarter in the final week of June.
Consensus is for it to earn just 11 cents on a per-share basis versus $1.01 a year ago.
Ahead of the earnings release, Nike stock is down nearly 25% versus its year-to-date high.
Why is Nike losing share to its competitors?
Nike’s chief executive Elliott Hill has been working on rebuilding ties with wholesale partners this year as part of his broader efforts aimed at reinvigorating growth at the footwear giant.
In March, he even told investors that “I’m proud of the progress we have made” on the turnaround plan. However, Josh Brown is not buying any of it.
According to the globally followed investor, none of what Nike has done so far suggests it’s headed for a successful turnaround.
Nike stock remains in shambles as the company’s celebrity representatives age out of popularity, he argued in a CNBC interview, adding “LeBron James is in his 40s – and Michael Jordan is about 30 years retired.”
Nike stock needs more than classic sneakers to run
Investors should note that Nike managed to come in ahead of Street estimates in its latest reported quarter. But that strength failed to breathe new life into its stock price.
“I don’t even know what we do with something like Nike stock here. It’s just a falling knife,” the chief executive of Ritholtz added in the said interview.
All in all, Brown is convinced that classic sneakers like Jordans or Air Force 1 will no longer prove sufficient for NKE to address competition that’s only getting fiercer by the minute.
That said, Nike shares do currently pay a dividend yield of 2.61% that makes them a little bit more attractive to own in 2025.
Should you buy NKE shares at the current discount?
Investors should note that Nike stands to take a material hit due to higher tariffs under the Trump administration as well.
In fact, it recently announced plans of raising prices, which may prove detrimental for a business that’s already grappling with a sales decline. NKE’s topline contracted another 9% in its fiscal Q3.
Still, Wall Street analysts haven’t thrown in the towel on Nike stock just yet.
Consensus rating on the company based out of Beaverton, Oregon remains at “overweight” with the mean target of about $73 indicating potential upside of about 20% from current levels.
Nike shares are currently trading at a discount price-to-earnings multiple relative to its historical average over the past five years.
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