Nike – 38% Sales Decline

Posted on | by Leon Hinde

Nike reported a quarterly net loss and a sales decline of 38% year-over-year. 

Business operations were hurt from stores being shut temporarily, and online revenue was not enough to make up for that. 

Nike reported a loss of $790 million, or 51 cents per share during the period ended May 31, compared with net income of $989 million or earnings of 62 cents per share, a year ago. 

Total revenue was down 38% to $6.31 billion from $10.18 billion a year ago.

We remain on the short side of the Nike trade.

Nike – Sell

Posted on | by Leon Hinde

Nike is expected to report EPS of $0.18, down 70% from the prior quarter. Revenue down 20% to $8bn.

We see Nike as a shorting opportunity coming into the June quarter earnings result.

The above post was made on the 29th May and since then, the US market has pushed higher. With retail likely to fall short of earnings estimates, we remain cautious heading into next month’s earnings.

The below chart shows the updated price action in Nike, and of importance, the close below the momentum indicators.

US Markets

Posted on | by Leon Hinde

For regular readers of our blog and viewers of the Monday night webinars, you would be very familiar with the earnings table below.

The S&P500 index is trading at an assumed $170 of earnings per share for FY21 and $180 of EPS for FY22. We feel these targets are too optimistic and the range could be more like $125 to $150, with a slower rate of recovery into 2022.

The close on Thursday and Friday now has the major US indices trading below our short-term momentum indicators.

Our target for the S&P500 is 2500 support and 3300 resistance.

Berkshire Hathaway

Posted on | by Leon Hinde

Berkshire Hathaway is under Algo Engine buy conditions and is a current holding in our US S&P100 model portfolio.

We see the recent sell-off from $230 down to $160 as an opportunity for long term investors to accumulate the stock.

Investor Signals can establish a broking account for you to buy US stocks. We can advise and execute the orders on your behalf. For more information on our US broking account, please call 1300 614 002.

US Markets

Posted on | by Leon Hinde

A strong performance from Amex and ConocoPhillips overnight, both names are current holdings in our US managed fund.

We continue to watch the NASDAQ for a break below the current uptrend, at which time we’ll increase index hedging.

Raytheon – High Conviction Buy

Posted on | by Leon Hinde

Raytheon, (listed on the New York Stock Exchange) is now under Algo Engine buy conditions and was added into our US S&P100 model portfolio, prior to last week’s earnings result.

Raytheon is a major U.S. defense contractor and industrial corporation with core manufacturing concentrations in weapons, military and commercial electronics. In 2020 the company will merge with United Technologies and we anticipate the merger will help unlock value for shareholders and underpin the growth story for many years to come.

The stock trades 19x earnings and a 2 % dividend yield. A combination of the upcoming merger and the large scale of future share buybacks has Raytheon on our “high conviction” buy list.