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Nike Stock Forecast: Key Strengths Review Prior to Q3 2017 Announcements

The article was written by Jordan Klotnick, a Financial Analyst at I Know First. He graduated from Monash University with a Bachelor’s in Business – Majoring in Marketing.

 

Nike Stock Forecast

Summary

  • Nike financial highlights for the past 4 years
  • Nike’s Future Targets
  • I Know First Bullish Forecast for Q3 results 2017

Background

NIKE, Inc. (NKE), together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. It offers products in nine categories, including running, NIKE basketball, the Jordan brand, football, men’s training, women’s training, action sports, sportswear, and golf. (Yahoo Finance).

Nike was founded in 1964, with the initial intention of selling running shoes. As time went on, their product range widened to apparel for common sports, such as basketball and leisure wear. In 1976 Nike had reached revenues of $14 million and went public in 1980, initially offering 2 million shares of stock. By 1997, the stock hit an all-time high at a price of $76 a share. Then, in 2003, Nike purchased Converse.

Nike, a brand that many athletes and non-athletes have come to use to define premium quality athletic products and services. The firm has seen much growth in its business strategy development and brand recognition over the past couple decades. They had begun to shift their efforts and targeting the higher end market in the athletic apparel industry to become the dominant premium brand (above Adidas).  The brand of Nike is no longer representative of even athletic apparel, rather they have managed to create an idea that they are able to help individuals overcome obstacles. This can be seen in almost any Nike commercial, whereas the main idea is not advertising the specific shoe or other product, rather the idea of overcoming obstacles. The company is also introducing a new $35 Hijab.

Nike financial highlights for the past 4 years

Source: NASDAQ

Nike has had an extremely positive last few years. With revenues increasing every year, proves that the company is growing each year.

Mark Parker, CEO of Nike said “in the fast moving world of sports and youth culture, results like these come from our obsession with the consumer of knowing what they need and what inspires them. That’s what drive innovation at NIKE and innovation is what drives growth. Our approach has fueled 28 conservative quarters of growth at a scale that is unrivaled in our industry. We have a strong track record and more importantly we have an even better runway ahead.”

Nike’s Future Targets 

Earlier in 2016, at a shareholder meeting, CEO Mark Parker set a goal to reach $50 billion in sales by 2020. NKE expects to do so through continual product development, further market penetration in emerging markets, and increasing focus on its women’s division.

Naming former executive from EA Mobile and Disney Interactive Adam Sussman as Chief Digital Officer, Nike aims to fast-track their digital strategy in e-commerce and consumer engagement. They plan to increase ecommerce revenue from $1 billion to $7 billion by 2020. They will continue to measure and maximize consumer engagement through their interactive Nike+ running, training and Fuelband apps.

Nike looks to double its revenue in women’s apparel over the next four years, from $5.5 billion to $11 billion. They have partnered with Wieden and Kennedy to create an eight-part long-form video series titled “Margot vs. Lily”. It’s a bet between sisters Margot and Lily wherein the generally inactive Margot must make fitness videos while her fitter sister, yet less social must make friends. The company sees this as a way to engage with millennial women.

I Know First Bullish Forecast

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Conclusion 

Nike is announcing their third quarter financial results on Tuesday, March 21th, 2017, after the market closes. Investing in a firm prior to earnings can result in a massive opportunity set (those the risks are high). NKE has shown a high growth trend over the past quarters, indicating the firm is on track for a positive performance. Additionally, I Know First’s AI-based algorithm maintains a bullish prediction on NKE shares as well.

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