PreMarket Prep Stock Of The Day: Nike

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

In normal times, earnings reports and analyst ratings are the two primary factors that influence price action in a particular issue. We all know these are not normal times.

With that being said, the stock of the day is Nike Inc NKE which reported third-quarter earnings after the close on Tuesday.

Nike's Results: A Beat Is A Beat

Keeping in step with its prior reports, the company posted a 19-cent EPS beat and a $304-million sales beat.

The diluted EPS figure included a 25-cent non-recurring, non-cash charge related to a deal with a strategic distributor in South America, according to Nike. 

The  company has produced an EPS beat in 30 of 32 quarters going back to the fourth quarter of 2012. Nike's sales record is solid, but not nearly as impressive.

Of course, this quarter reflects the last three months of business activity and does not include the entire negative impact of the recent shutdown of the global economy.

Long-Term Nike Price Action

Although the broad market peaked in mid-February, Nike made its all-time high in January at $105.62.

Just as the broad market has been trashed, so have Nike shares. Interestingly, its low for the recent move was made March 18 at $60 and was revisited when the broad market finally bottomed Monday, only reaching $60.58.

Short-Term Nike Price Action

Just as the broad market rebounded with a vengeance Tuesday, Nike did as well. After ending Monday’s session at $62.80, its lowest close since Dec. 12, 2017, it rallied to $72.33, or a tidy 15%. 

So far, the earnings beat and market conditions have enabled Nike to reach $80.98 off the open Wednesday before reversing course.

The ensuing decline took the issue to $76.38 before it rebounded back to the $80 area. It has not closed above $80 since March 11, when it closed at $84.

The stock was trading 12.21% higher at $81.23 at the time of publication. 

Nike Moving Forward

Wednesday's continuation rally is very impressive and based on sold fundamental information. Yet it's impossible to predict how the next few quarters will be for the company.

With the issue still within $25 of its all-time high, investors should pick a potential upside target for the issue, if they have one, and a potential exit point if the issue retreats.

For the most part, so goes the broad market in the next year, so will go shares of Nike. 

Photo courtesy of Nike.