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NIKE

NIKE. Presentation Outline. Snapshot Brief Overview Financial Statements Industry Comparison Current News Technical Analysis Trend Analysis Eval Summary of Valuations. Analysts Recommendations Risk Investment Recommendations. Snapshot. Brief Overview.

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NIKE

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  1. NIKE

  2. Presentation Outline • Snapshot • Brief Overview • Financial Statements • Industry Comparison • Current News • Technical Analysis • Trend Analysis • Eval • Summary of Valuations • Analysts Recommendations • Risk • Investment Recommendations

  3. Snapshot

  4. Brief Overview • NIKE’s principal business activity is the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory product • The largest seller of athletic footwear and athletic apparel in the world • Distributed in over 160 countries around the world • Sell under the NIKE brand, wholly owned subsidiary Converse, Cole Haan, g Series, Bragano, Hurley, NIKE Hockey, and Exeter brands • Main competitors have joined with the recent announced acquisition of Reebok by Adidas

  5. Overview • Nike’s best year was last year. • The US accounts for 46% of revenues. • Market Cap doubled in 1 year, mostly due to the growth in US footwear sales. • Internet market share makes buying shoes easy. • No such thing as bad publicity.

  6. Financial Statements • Sales growth has consistently grown over the last four years • 4.3% in 02’ 8.1% in 03’ 14.5% in 04’ 12.1% in 05’ • Increase in Gross Margin from 39%-45%, however this is not likely to continue to grow in future years • Red Flags…

  7. Industry Comparison

  8. Current News • England just banned the use of a chemical that is used in the production of leather shoes. The affects on NIKE have yet to be determined. • Adidas announce its acquisition of Reebok. These are the two biggest competitors, who when combined, will be roughly the size of NIKE.

  9. Technical Analysis In the last Year… • Support level 76 dollars per share • Resistance level approximately 92 dollars a share • Last 5 years… • Support level at 39 dollars a share

  10. Technical Analysis Continued… • In line with its 200 day moving average • Has tended to less volatility over the last 2-3 years

  11. Trend Analysis

  12. Inventory Trends

  13. Leverage Analysis

  14. Operating Cash Flow

  15. Revenue Breakdown

  16. EVal

  17. Summary of Valuations

  18. Analysts Recommendations • Analysts have a price target between 95-110 dollars depending on one or two year return • Consensus recommendation is OUTPERFORM • Mean rating is a 1.84, down from a 2.06 two months ago

  19. NIKE Risk • Risk Grade – 103 (Max 134) • Over 3/4 of all stocks available are more risky than NIKE

  20. Risk Cont’d

  21. Portfolio with NIKE • Risk Grade of 60 vs. current risk grade of 62 • An analysis of our current portfolio labels consumer discretionary as the most underweight sector compared to the benchmark • Interesting Facts: • Nike NEVER made an offer to buy Under Armor • They had Nike Shocks well before they were sold in store but decided to hold sale until Michael Jordon retired and his shoe line lost popularity

  22. Investment Recommendations • Positive: Company has strong potential if it can tap into the foreign markets (China and International Soccer). A purchase of 65 shares would account for 4.65% of the portfolio and would have a market value 5,382 dollars. • Negative: • Right now too much stress is put on the strength and growth of the US Footwear sector. • The abroad sector that is expected to grow contributes a low percentage of overall revenue. However, this does leave room for rapid growth and expansion. • The company has doubled its market cap. over the last five years and has seen a very wide trading range between 50 and 90 dollars.

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