NIKE

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(No Transcript)
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NIKE
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Presentation Outline

• Snapshot
• Brief Overview
• Financial Statements
• Industry Comparison
• Current News
• Technical Analysis
• Trend Analysis
• Eval
• Summary of Valuations

• Analysts Recommendations
• Risk
• Investment Recommendations

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Snapshot
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Brief Overview

• NIKEs 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

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Overview

• Nikes 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.

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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

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Industry Comparison
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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.

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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

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Technical Analysis Continued

• In line with its 200 day moving average

• Has tended to less volatility over the last 2-3
  years

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Trend Analysis
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Inventory Trends
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Leverage Analysis
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Operating Cash Flow
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Revenue Breakdown
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EVal
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Summary of Valuations

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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

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NIKE Risk

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

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Risk Contd
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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

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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.