econ the stock market

200 160

100 80 60 50 40 30

20

2-for-1

Percent shares traded

30 20 10

Target Price Range 2024 2025 2026

NIKE, INC. ‘B’ NYSE-NKE 136.64 40.8 64.524.0 1.84 0.8% TIMELINESS 3 Lowered 7/10/20 SAFETY 1 Raised 8/11/06 TECHNICAL 3 Lowered 4/16/21 BETA 1.15 (1.00 = Market)

18-Month Target Price Range Low-High Midpoint (% to Mid)

$91-$212 $152 (10%)

2024-26 PROJECTIONS Ann’l Total

Price Gain Return High 175 (+30%) 7% Low 145 (+5%) 3% Institutional Decisions

2Q2020 3Q2020 4Q2020 to Buy 964 889 1065 to Sell 766 864 839 Hld’s(000)100581010089231023772

High: 23.1 24.6 28.7 40.1 49.9 68.2 65.4 65.2 86.0 101.8 148.0 147.1 Low: 15.2 17.4 21.3 25.7 34.9 45.3 49.0 50.3 62.1 71.2 60.0 125.4

% TOT. RETURN 3/21 THIS VL ARITH.*

STOCK INDEX 1 yr. 62.0 99.7 3 yr. 106.1 51.6 5 yr. 128.6 100.0

CAPITAL STRUCTURE as of 2/28/21 Total Debt $9416 mill. Due in 5 Yrs $4500 mill. LT Debt $9412 mill. LT Interest $515 mill.

(44% of Capital)

Leases, Uncapitalized Annual rentals $553 mill. No Defined Benefit Pension Plan

Preferred Stock None Common Stock 1,579,967,074 shares Class A shares: 305,011,252 Class B shares: 1,274,955,822

MARKET CAP: $216 billion (Large Cap) CURRENT POSITION 2019 2020 2/28/21

($MILL.) Cash Assets 4663 8787 12528 Receivables 4272 2749 3669 Inventory (LIFO) 5622 7367 6693 Other 1968 1653 1810 Current Assets 16525 20556 24700 Accts Payable 2612 2248 2257 Debt Due 15 251 4 Other 5239 5785 6633 Current Liab. 7866 8284 8894

ANNUAL RATES Past Past Est’d ’18-’20 of change (per sh) 10 Yrs. 5 Yrs. to ’24-’26 Sales 9.5% 8.5% 10.0% ‘‘Cash Flow’’ 10.0% 7.5% 21.0% Earnings 9.5% 7.5% 24.0% Dividends 13.5% 13.0% 12.0% Book Value 2.5% -3.0% 11.0%

Fiscal Year Ends

Full Fiscal Year

QUARTERLY SALES ($ mill.) A Aug.31 Nov.30 Feb.28 May 31

2018 9070 8554 8984 9789 36397 2019 9948 9374 9611 10184 39117 2020 10660 10326 10104 6313 37403 2021 10594 11243 10357 11156 43350 2022 12325 12495 11650 12210 48680 Fiscal Year Ends

Full Fiscal Year

EARNINGS PER SHARE AB Aug.31 Nov.30 Feb.28 May 31

2018 .57 .46 .68 .69 2.40 2019 .67 .52 .68 .62 2.49 2020 .86 .70 .78 d.51 1.85 2021 .95 .78 .90 .52 3.15 2022 1.15 1.00 1.10 .70 3.95 Cal- Full

endar Year QUARTERLY DIVIDENDS PAID C■

Mar.31 Jun.30 Sep.30 Dec.31 2017 .18 .18 .18 .18 .72 2018 .20 .20 .20 .20 .80 2019 .22 .22 .22 .22 .88 2020 .245 .245 .245 .245 .98 2021 .275 .275

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 6.54 7.22 8.10 9.48 9.87 9.82 10.97 13.17 14.16 15.98 17.85 19.25 20.91 22.73 .66 .80 .86 1.04 1.06 1.15 1.30 1.42 1.62 1.85 2.26 2.62 3.01 2.95 .56 .66 .72 .86 .88 .97 1.10 1.18 1.35 1.49 1.85 2.16 2.51 2.40 .12 .15 .18 .22 .25 .27 .30 .35 .41 .47 .54 .62 .70 .78 .12 .16 .16 .23 .23 .17 .23 .33 .36 .51 .56 .68 .67 .64

2.69 3.03 3.49 3.98 4.48 5.04 5.18 5.67 6.24 6.22 7.41 7.29 7.55 6.13 2100.8 2072.0 2015.2 1964.4 1942.0 1936.0 1902.0 1832.0 1788.0 1740.0 1714.0 1682.0 1643.0 1601.0

17.9 16.0 16.5 17.8 15.3 16.4 18.2 20.4 19.4 24.2 24.4 27.5 21.6 25.3 .95 .86 .88 1.07 1.02 1.04 1.14 1.30 1.09 1.27 1.23 1.44 1.09 1.37

1.2% 1.4% 1.5% 1.4% 1.8% 1.7% 1.5% 1.4% 1.5% 1.3% 1.2% 1.0% 1.3% 1.3%

20862 24128 25313 27799 30601 32376 34350 36397 15.1% 14.1% 14.6% 15.1% 15.6% 15.9% 15.9% 14.3% 335.0 373.0 438.0 518.0 606.0 649.0 706.0 747.0

2133.0 2223.0 2464.0 2693.0 3273.0 3760.0 4240.0 3974.0 25.0% 25.5% 24.7% 24.0% 22.2% 18.7% 13.2% 8.1% 10.2% 9.2% 9.7% 9.7% 10.7% 11.6% 12.3% 10.9% 7339.0 7666.0 9700.0 8669.0 9642.0 9667.0 10587 9094.0 276.0 228.0 1210.0 1199.0 1079.0 2010.0 3471.0 3468.0

9843.0 10381 11156 10824 12707 12258 12407 9812.0 21.1% 21.0% 20.0% 22.6% 23.8% 26.5% 26.9% 30.3% 21.7% 21.4% 22.1% 24.9% 25.8% 30.7% 34.2% 40.5% 16.0% 15.5% 15.8% 17.5% 18.7% 22.3% 25.0% 27.8%

26% 28% 29% 30% 27% 27% 27% 31%

2019 2020 2021 2022 © VALUE LINE PUB. LLC 24-26 24.95 24.01 27.45 31.10 Sales per sh A 41.85 3.02 2.35 3.60 4.45 ‘‘Cash Flow’’ per sh 9.25 2.49 1.85 3.15 3.95 Earnings per sh AB 8.00 .86 .93 1.04 1.12 Div’ds Decl’d per sh CD ■ 1.66 .71 .70 .50 .60 Cap’l Spending per sh .85

5.77 5.17 7.75 8.30 Book Value per sh 10.65 1568.0 1558.0 1580.0 1565.0 Common Shs Outst’g EF 1500.0

32.0 48.6 Bold figures are Value Line estimates

Avg Ann’l P/E Ratio 20.0 1.70 2.49 Relative P/E Ratio 1.10

1.1% 1.0% Avg Ann’l Div’d Yield 1.0%

39117 37403 43350 48680 Sales ($mill) A 62750 14.0% 11.3% 14.7% 15.5% Operating Margin 20.0% 705.0 721.0 725 770 Depreciation ($mill) 975

4029.0 2937.0 4975 6200 Net Profit ($mill) 12000 16.1% 10.6% 17.0% 20.0% Income Tax Rate 21.0% 10.3% 7.9% 13.3% 12.7% Net Profit Margin 24.3% 8659.0 12272 15500 16000 Working Cap’l ($mill) 18000 3464.0 9406.0 9300 8500 Long-Term Debt ($mill) 5000 9040.0 8055.0 12200 13000 Shr. Equity ($mill) 16000 32.7% 17.6% 24.5% 30.0% Return on Total Cap’l 58.0% 44.6% 36.5% 41.0% 47.5% Return on Shr. Equity 75.0% 29.8% 18.4% 27.5% 34.0% Retained to Com Eq 59.5%

33% 49% 33% 28% All Div’ds to Net Prof 21%

Company’s Financial Strength A++ Stock’s Price Stability 75 Price Growth Persistence 90 Earnings Predictability 75

(A) Fiscal years end May 31st. (B) Diluted earnings. Excludes nonrecurring: ’07, 2¢; ’08, 8¢; ’09, (13¢); ’13, 1¢; ’18, ($1.23) due to tax law change; ’20, (25¢). May not sum due to

change in share count. Next egs. report due late June. (C) Dividends historically paid in early January, April, July, and October. ■ Reinvestment plan

available. (D) Includes 21¢ dividend paid De- cember 2012. (E) In millions, adjusted for splits. (F) Each share of Class A is convertible to one share of Class B.

BUSINESS: NIKE designs, develops, and markets footwear, ap- parel, equipment, and accessories. Sells products to retail ac- counts, through NIKE-owned stores and the Internet, and through a mix of independent distributors and licensees in numerous coun- tries. Offerings are focused in six categories: running, basketball, the Jordan brand, football (soccer), training, and sportswear. There

is another product line for kids. Has about 76,700 employees (in- cluding part-timers). Swoosh, LLC, owns 74.9% Cl. A shares, 15.9% Cl. B; offs./dirs., 3.8% of Cl. B; Vanguard, 8.6%; BlackRock, 7.2% (7/20 proxy). Chairman: Mark G. Parker. CEO: John Donahoe. Inc.: Oregon. Addr.: One Bowerman Drive, Beaverton, OR 97005. Tel.: 503-671-6453. Internet: www.nikeinc.com.

NIKE’s fiscal third-quarter report (years end May 31st) did not sit well with the investment community. Shares of the footwear titan had been trending higher in the days leading up to the release of February-period financials, and so too were expectations for both sales and earnings. This likely contributed to the selloff that followed the announcement of results that were a mixed bag. Sales of $10.4 billion missed the mark of $11.0 bil- lion, while earnings came in at $0.90 a share versus a consensus of $0.75. Digital sales continued to rise sharply, but took a step back from the feverish pace of earlier this fiscal year. Too, supply chain issues tied to problems at ports brought down receipts in the North American market. Wall Street follows this key metric closely, and the quotation started sliding when the reading did not meet expectations. Also, the stock had been up 80% in the last year, so profit taking played a role. Our earnings estimate for fiscal 2021 is up by a dime per share, to $3.15. After factoring in the $0.15 beat in the February quarter and our $0.05 trim on the May quarter, we land at $3.15, which

would be an all-time record for the swoosh, and quite the accomplishment given the backdrop of the world’s largest health crisis in a century. The company’s digital presence shined brightly given the lock- down conditions around the globe, and its NIKE Direct plan, where sales go directly to consumers and avoid third-party retailers, have margins heading north. We are introducing a fiscal 2022 share-net target that equates to 25% growth from our expected level in the previous year. There appears to be no reason why earnings cannot reach another record high next fiscal year as the swoosh starts firing on all cylinders coming out of the pandemic. Growth around the world has been handsome, led by a growing presence in China, where a growing rela- tionship with the NBA has bore fruit. Here at home, we look for online sales to remain elevated given customization/specification options that are unparalleled. These high-quality, neutrally ranked shares are not all that appealing at recent price points. We advise sub- scribers to await a better entry point. Erik M. Manning April 23, 2021

LEGENDS 16.0 x ″Cash Flow″ p sh

. . . . Relative Price Strength 2-for-1 split 12/12 2-for-1 split 12/15 Options: Yes Shaded area indicates recession

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