To The Moon

Nike reports their Q3 earnings on March 21st after the closing bell. Expectations from analysts are:

Revenue Estimate: $11.43B +5.18% Y/Y

EPS Estimate: $0.54 -38% Y/Y

Gross margins have been impacted for the last few quarters due to shipping, logistics, foreign exchange rates, and more recently bloated inventory numbers which have impacted Nike's gross margins in a negative way.

Fiscal Quarter Gross Margin

Q2 2023 42.9%

Q1 2023 44.3%

Q4 2022 45%

Q3 2022 46.6%

Q2 2022 45.9%

Q1 2022 46.5%

China revenue & EBIT

Investors will be looking at China operations on its revenue and EBIT. From a revenue perspective, the China region had been under pressure largely because of China's "zero Covid" policy. In Q1 from a constant currency perspective, sales were down 13% Y/Y. During Q2 Nike saw a significant bounce back with sales in China increasing 6%.

Looking at its revenue results by region, in Q2China declined 10% Y/Y, which was an improvement from Q1 in which China declined 22% Y/Y.

As COVID-19 restrictions have mostly been lifted in China, the chances of going back towards growth in China are likely to pivot soon.

NKE price action

NKE as of March 17 close

In terms of the price action, Nike has had a goon run since bottoming at the end of September last year. For most of this year, it has been above its 50 daily MA but has dipped below that recently, but is still above its 150 daily MA & 200 daily MA. Price levels to look for after earnings are likely support at 200 daily MA at around $110, while psychological support at $100 also will look attractive. If revenue & EPS beats or positive guidance could retest the recent highs of $130.

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