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Good day subscribers thank you so much for joining me today i am jeremy this is a financial education channel and today we’re talking one of my favorite series of the entire week is it a bye and we are doing nike stock today this series i break down one random stock that you guys suggest from the previous week so right now why don’t you guys go ahead and put in that
Comment section what stock you would like to see broken down on next week’s video so i can potentially break that stock down this week we had two people request nike and they were the winner jimmy eats corn mc congratulations you requested nike and michael saladino you also requested nike so congrats guys i’m looking very forward to breaking down nike the first thing
I checked out about nike when i went to their investor relations page is they get the sickest investor relations page of any corporation i’ve ever gone to their freaking investor relations page they put some money into that thing they have like moving photos and just all its looks so professional and it looks so epic they have like pictures of all their athletes
The nike athletes it just looks awesome so i just wanted to tell you guys that is cool leave this video a thumbs up today guys if you enjoy this let’s get into nike so as always we’re pretending we have no clue what nike is or what they do so we’re looking in the 10k section the annual report on nikes investor relations page and this is the first paragraph we focus
Nike brand product offerings on nine key categories running nike basketball the jordan brand football soccer men’s training women’s training action sports sportswear and golf basically as you read through that paragraph nike makes athletic clothing they make shirts they make pants they make shoes they make hats and make headbands about anything possible you could
Think that’s sport related and it’s something you put on your body nike makes it that’s what nike does let’s move on to this section here this is showing basically the amount of break down they get from the united states for their business and newse versus what they get internationally so the united states accounts if you were that first sentence there under the
United states market it says for fiscal 2016 nike brand in converse i had no clue before i looked in nike that nike owned converse did you guys know that nike owned converse let me know if you do i had no clue about that conversation the united states accounted for approximately 47% of total revenues compared to 46% in both fiscal 2015 and 2014 so basically they
Get about 47% of the revenue from the united states market they get the other 53% from the rest of the world so china europe every other asian country brazil all these other places they account for 53% u.s. comes for 47% that’s amazing to me that nike as internationally expanded as they are still only 53% of their businesses made up of international that kind of
Either proves to me that making may have a little trouble transitioning out of the united states or that mit nike just has a lot more potential to expand in international markets because nike should only probably be 20-25 percent in united states in the 70 75 % international in my opinion so let’s go on and now we’re looking at this manufacturing section i thought
This was very very important to look at we are supplied by approximately 142 footwear factories located in 15 countries why i believe this is an important thing to look at is making as a lot of products and it’s very important their products are get out there to customers so the fact that they’re in 142 different factories in 15 different countries shows me that
They have the span that if something went wrong with the factory or workers went on strike or something they could just ship that production to another factory like that it would be very simple for them because they have so many different factories they use so if say one of their major shoe lines factories went down just switch it to another factory it’s not like a
Catastrophic catastrophic event for nike so i really like how diversified they are with how many different manufacturing facilities they get manufactured from how many different countries all those kinds of things you never know in politics somebody can put plates a tariff on if you get things made in this country or that country maybe you can say okay we’ll just
Shift our production from this country to that country next page up with this is an important page so now we’re under the risk factors section of the annual report one of my favorite sections that i cover with pretty much every company with you guys and this this talks about our products face intense competition nike is a consumer products company and relative
Popularity of various sports and fitness activities are changing design trends affect the demand of our products negi is a nikes facing a lot of competition from under armour especially on norma especially is giving them the most competition in my opinion they also face some from adidas puma i want to share some of some very interesting things with you guys here
And show how competition is affecting nike specifically and this is an article stephane pari extends sponsorship deal with under armour through 2024 through those you guys who do not know who stephan curry is he’s the two time leaving mvp in the nba he’s a second most popular nba player only behind lebron james he’s very young he has a ton of great years ahead of
Him he’s a superstar in the nba world and he’s starting to become a bit of a superstar even for people who don’t watch basketball will start to know his name if they do not already and the fact that making lost him to under armor shows me how intense the competition is for these athletes then specially under armour you know under armour wouldn’t even have been
A threat five years ago they wouldn’t even been a threat ten years ago for sure under armour was just a little little company at that time under armour is a big dog company to pull away someone like stefan curry know the interesting thing is it wasn’t just about under armour throwing money at stefan curry listen to this i’m not researching into this and this is
Gonna blow your guys’s mind so this is specifically in regards to win stefan curry actually went to the nike corporate office and he was pitched you know by nike saying hey we want sign-u and this is what we want to do this is what happened the pitch meeting according to steph’s father dell dell dell curry also played in the nba steph’s father who was present
Kicked off with one nike official accidentally addressing stefan’s stephon as stefan yeah who so that’s just a funny thing now is this a huge deal well when you’re dealing with superstars man this kind of stuff is a big deal you know it’s just interesting let’s look at some of this more he says i heard some people pronounce his name wrong before says dell curry
I wasn’t surprised i was surprised that didn’t get a correction it got worse from there a powerpoint slide featured kevin durant kevin durant another great nba player kevin durant’s name presumably left on by accident presumably from the past materials i stopped paying attention after that so basically they kind of threw together a generic powerpoint and they had
Left kevin garnett’s name on the little powerpoint slide they had showed they must have showed kevin garnett a few days before a few weeks before whatever and this – – steph steph and his dad just showed that nike was not taking them seriously you pronounce my name wrong you’ve got the kevin durant’s name up there instead of my name on the powerpoint and it might
Sound like petty stuff it might be like oh what’s the big deal when you’re a superstar man you demand respect and you get respect everywhere you go and when you don’t get it by someone that should be bowing at you you’re probably gonna be thrown off a little bit you’re probably gonna be a little like you know feel like you’ve been disrespected and that’s exactly
What happened this situation so i think from an investment standpoint this just shows that maybe there aren’t as good of controls in nike as there once was would something this happened 10 15 years ago where if a big nba player came in and you know they screw up like this i don’t know maybe this is something new were nike maybe they’re just getting a little lacks
Or getting too big not enough important people overseeing important people there’s kind of like oh we’re 9 you’re a big deal we need to really try that hard anymore i don’t know it’s something a very interesting under armor signs bryce harper to new 10-year deal bryce harper is one of the most popular baseball players and one of the best baseball players in the
Entire league under armour stole him away from nike and from all the other brands so not only does under armour take the second best pup of player or a second most popular player in nba then they take away arguably the most popular baseball player in his prime is well away from nike you know this is a common trend under armor re-ups jordan speith under armour
Stole away jordan spieth from nike and all the other companies another huge sign of jordan spieth is the best golfer in the world if not the best maybe the second-best so once again another huge name athlete that underarms are stolen away from nike this is all worth very pay attention to when you’re making an investment decision you have to pay attention to this
Stuff because it’s it’s not a good sign for nike you know this is just an armor saying we got more money we got more power we got more things we can do with these guys they knew that’s him these athletes would not have been lost to an armor five years ago hermer is way too small they would not uh nike would have won all these athletes over easily next one i think
This was a huge one and this is kind of affected nike for the last ten years both signed with puma usain bolt you know worldwide superstar doesn’t matter if you even no track or anything you know who usain bolt is the fastest man ever nike could have made so much money off usain bolt and usain bolt was reportedly only getting about ten million a year from puma i
Cannot believe nike screwed that one up guys i cannot believe it they should have thrown in whatever dot if they needed to go double what puma did they should a win double we’re talking about the greatest sprinter in the history of the world someone that times will probably never be beat in my lifetime and if it is it’s gonna be a miracle so it amazes me that nike
Has lost hugh and these aren’t like you know small-time guys these are huge named after a huge name after a huge name after a huge name it’s worth paying attention to and this is very intense competition next up we’re showing nikes graph for the last five years versus the the sp versus the dow you can see nike very much outperformed all the indices and whatnot but
Of course we’re looking toward the future the past really doesn’t matter i just thought this would be interesting to show you that nikes outperformed everything for the last five years so now let’s dig into the financials the fun part so we have the income statement here as you can see all the way in your right hand side we have 2014 in the middle we have 2015 on
The left we have 2016 you can see from 2014 they had a little under 28 billion they grew that to over 32 billion dollars in total revenue now we can also see they grew gross profit a great deal as well they grew it from twelve point four billion in 2014 to almost 15 billion fourteen point nine billion in 2016 very impressive and then if you look at the bottom
Line numbers they’ve grown net income by over a billion dollars in two years that’s extremely impressive very very impressive from 2.6 billion to 3.7 billion bravo nike you’ve done a great job last three years getting get more revenue and much more profitable very impressive income statement i will say let’s look at them that balance sheet now balance sheet we
Pay attention to cash we pay attention to our investments we pay pitch the long-term investments and then we pay attention to the debt and how much debt they have and we kind of minus those out so cash they have about 3.1 billion short term investments 2.3 billion long term investments they have none you see just dashes across the lines there so that makes for
About five five and a half billion worth of cash and investments versus they have a very super small amount of short-term debt doesn’t even matter but they do have two billion in long-term debt so they have about 3.5 billion dollars more in cash and investments than they do debt i would rate this balance sheet a good balance sheet is very solid twelve billion
Dollars and stockholders equity it’s very impressive it’s a very good battle she it’s not a great balance sheet but it’s a good balance sheet a solid solid company this was from actually today so news came out now analyst i don’t pay them tons of attention because they’re analysts at the end of the day and i feel like analysts are mostly there to do a job they’re
Not very passionate in my opinion most of them are not passionate about stocks they’re just there to collect their paycheck every week and analyze these stocks they’re impassionate like someone that’s an actual investor in these companies what you’re taking your money into it and you will try to find every little thing and try to you just have a passion for it if
Your investor these analysts you know but the analyst here says that bank of america downgraded athletic gear stock to on monday to sell from a whole citing market share losses to adidas and under armour which has been nipping at nikes heels with new products and aggressive marketing let’s go down to that bottom paragraph the rain change stands out because wall
Street rarely dings blue chip companies blue chip companies means huge companies by the way guys like nike with a sell rating in fact since 1997 nike has never had more than one sell rating on a stock at a given time so analyst kind of this analyst specifically a bank of america is kind of thinking the things that i’m saying we’re a huge name athletes are getting
Stolen away from nike getting signed with other companies those athletes are very influential and they push those other companies products which then takes away market share from a key and then athletic athletic type performance items or whatnot have been on fire you’ve had companies like lululemon come in and a lot of other smaller brands that are kind of slowly
Stealing some market share away from nike so you have a lot of people competing more viciously than i’ve ever seen in growing up because i was always in sports so i was always in tune to what i wear and by the way i always wear nikes still nowadays even if i’m doing activities now if i’m just wearing around i have a pair of under armour’s if i go to work i have a
Pair of pumas and if i dress up nice i have a nice pair of a sketch shoes i wear just some information next up we’re looking at the latest quarterly resort results that make you post it revenues up 8% to 9 point 1 billion 10 percent growth excluding currency exchange excuse me currency changes diluted earnings per share otherwise known as eps up 9 percent to 73
Cents compared to prior year so based upon the last quarterly results based on what they’ve done the last three years this company is growing revenues at a very nice clip for how big they are they’re growing profits at a very nice clip the question is is all this gonna come down and underarms are just gonna really start hammer nike with pricing with marketing all
These kinds of things is this type of growth sustainable for nike in the future years that’s the big question so let’s go ahead and look at some statistics here nike shares close that forty nine dollars and sixty two cents today it actually hit its 52-week low to day believe it or not i hit it today you can see the it’s been as high as $68 but right now he literally
Hit that 52 week low today which was kind of rare p/e ratio currently which is toward the bottom right just so you guys know p/e ratio of 22 not super high especially considering they have pretty good growth building right now based upon the last three years and based upon the last quarter they have earnings per share two dollars and 22 cents they have dividend
They pay and it’s about a little over 1% of a year based upon what they pay currently the next earnings won’t be coming out until december and a market cap of 82 billion so they’re fairly big company next page up we’re looking at the forward p/e forward p/e of around 18 so they’re expecting to get more profitable so the big question is is nike a buy nike for me
Would barely barely barely be a buy and i mean like i’m barely ranking in a bi barely if i was to go in and buy a nike right now i would start off with a very small position and i’d actually kind of root for the stock to go down more in the short term down low five 10% hopefully and then really start loading up because then at that point i’m not just like oh barely
Want to buy it but then i’m like okay now it’s down five ten percent now i really want to start getting in and building a position and then i might even root for it to go down a little more senang putting even a bigger position and then kind of have my position and then hope for the better gains in the future but yeah stock like nike right now i barely rank it a
Buy guys barely and like i said i i was actually investing in this which i i won’t be because i’m in a lot of other stocks i think are better than this but if i was i would start with a very very small position personally i hope this video helped tremendously guys are you understanding nike and my thought process all those kinds of things please do not forget to
Leave in the comment section what video you would like to see next week i can’t wait to do next week’s video and we’ll see who it is you cannot win if you don’t put your name in there leave a thumbs up if you enjoy these videos guys and if you have not subscribed you may want to i talk ton about personal finance in this channel i talk business i’m an entrepreneur
I talk business and i also talked so much about stock market including this series every single week thank you guys and have a great day
Transcribed from video
Is Nike Stock a BUY? | Nike Stock | Nike! By Financial Education