11-21-> WALL 1-26-> ROAD ST

@wealthtrajectory

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Nike stock

Why it worked

The post leverages a universally recognized brand (Nike) and a compelling narrative (stock at a 12-year low) to discuss investment strategy. It uses clear data points and a direct question to engage viewers, encouraging them to swipe for more information and potentially save the post for future reference.

Summary

This post analyzes Nike's stock performance, questioning whether its current low price represents a buying opportunity or a value trap. It delves into the company's financial performance, market challenges in China, and potential recovery signs, ultimately presenting a recap of key data points.

Structure

1Introduction: Nike's stock at a 12-year low
2Financial performance and valuation metrics
3Challenges in the China market
4Signs of recovery and positive performance areas
5The 'trap' explained through earnings multiples
6Chart analysis and future price prediction
7The verdict: quality companies at low prices

Original caption

Nike is at a 12-year low. Here’s the thing that made me post this. The stock trades at 19x what it earned last year, cheap against a five-year average near 32x. But it trades at 24x what it’s expected to earn next year. The multiple goes up as you look forward. That only happens one way: the market thinks earnings are going to shrink. That’s the difference between a cheap stock and a value trap, and it’s the single most useful thing I know about valuation. Costs you nothing to check on any stock you own. Trailing multiple lower than forward multiple = the market is pricing a decline. Two things I left off the slides: The dividend. Nike pays $0.41 a quarter, roughly a 4% yield. So “12 years, zero return” is true on the share price only, a holder did get paid to wait. It doesn’t fix the thesis but it’s the fair version. RSI divergence. On the 5-year chart, RSI has been making higher lows while price made lower lows. Textbook bullish signal. Also the most over-claimed pattern in technical analysis, it fails about as often as it works. If you spotted it on slide 6, you were right to. Everything here is backward-looking. The only forward number that matters is FY27 guidance, and that lands September 24 with a CFO who started six weeks ago. Save this and check it against that call. #stockstobuy #stockstowatch #stocks #stockmarketanalysis #stockinvesting

More from @wealthtrajectory

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11-21-> WALL 1-26-> ROAD ST YOU'VE WORN THEIR SHOES YOUR WHOLE LIFE. THE STOCK IS BACK TO 2014 PRICES. BUY OF THE DECADE OR VALUE TRAP? SWIPE FOR MORE 12 YEARS. ZERO RETURNS. On August 17th, Nike touched $38.86 intraday. The lowest price the stock has traded since September 2014. A share of Nike costs less today than it did the week the iPhone 6 launched. That's roughly 78% below its November 2021 peak of $179.10, and down about 36% this year. SAVE FOR LATER THE CHINA PROBLEM Greater China was supposed to be Nike's growth engine. Last quarter revenue there fell 12% to $1.30 billion. Digital revenue in China dropped 25%. Inventory is still elevated and the discounting hasn't stopped. Management guided FY27 revenue down low-to-mid single digits. Wall Street had modelled roughly flat. SAVE FOR LATER WHAT'S ACTUALLY WORKING North America grew 3% last quarter. Wholesale revenue rose 6% as Nike rebuilt the retail partnerships it spent years abandoning. Operating margin improved to 8.2%. Quarterly revenue came in at $10.97 billion, ahead of estimates. Hill restructured around vertically integrated sport teams, and the running category is growing again. SAVE FOR LATER THE TRAP, IN TWO NUMBERS Nike trades at about 19x trailing earnings on TTM EPS of $2.09. Against a five-year average near 32x, that looks cheap. But it trades at roughly 24x forward earnings. The market isn't pricing a bargain, it's pricing a decline. That's the difference between a cheap stock and a value trap and it's the whole question in two numbers. SAVE FOR LATER WHAT THE CHART SHOWS Nike has been compressing between two trendlines for five years, a falling ceiling off the $179 peak, and a floor sliding down since the 2020 low. Neither has broken. Price sits at $40.77, about 47% below its long-term moving average. RSI at 35.65, weak but still above the classic oversold line at 30. The lines converge near $30 in mid-2027. Something resolves before then. SAVE FOR LATER THE VERDICT You've been told your whole life that quality companies at low prices are how you get rich. Nike is the most recognisable brand on earth trading at a 12-year low. It isn't easy, because cheap and broken look identical from the outside, right up until one of them recovers. THE FULL RECAP 1. 12 year low 2. China -12%, digital -25% 3. North America +3%, wholesale +6% 4. 19x trailing, 24x forward, the trap 5. Five-year squeeze resolving near $30 SAVE THIS SO YOU DON'T LOSE IT FOLLOW SO YOU DON'T MISS THE NEXT POST