Nike’s Q4 figures tainted by morality issues

The sportswear giant’s apparent willingness to sponsor and deal with characters of dubious moral ethics is beginning to become a habit.

Nike store
Source: Bloomberg

On Thursday 25 June Nike is set to release its fourth-quarter figures. The sports apparel manufacturer’s adjusted earnings per share are called to increase from $0.78 up to $0.829 year-on-year. The company’s sales are also projected to improve, from $7.425 billion up to $7.679 billion. This should see a healthy jump in the Q4 pre-tax profits from $912 million up to $996.353 million.

Regardless of any press stories that might be dominating the headlines, the institutional opinion of the company still remains strong with 23 buy recommendations, 11 holds, and no sells. The average 12-month price target for the firm is $111.26 – still offering a 6.6% premium from the current share price of $104.37.

The recent developments in the FIFA scandal have seen references being made. Although these references do not specifically mention Nike, they leave little room for uncertainty that the firm was involved.

Unfortunately this latest development is merely confirmation of a growing trend where Nike have been willing to offer either second or third chances to sportsmen/women who arguably don’t deserve it. The company’s moral compass has been under question for some time.

Regardless of the reputational damage that has been done to the company, the recent news that they have agreed an eight-year deal to sponsor the NBA is a coupe especially as it will see them taking this over from major rival Adidas. Considering that its basketball goods sales are already the second largest department for Nike, the $1 billion cost could easily be re-cooped.

Since the beginning of 2014 the shares have made steady progress. They have raised from $78 up to the present $104 level having added 33% over this time and frequently being viewed as a longer term play. The buyers have already helped to prop up the shares following these latest issues.

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