Investors will get a glimpse at how the consumer discretionary sector is fairing with Nike NKE set to release results for its fiscal third quarter after-market hours on Thursday, March 20.
While the broader market selloff hasn’t caused a further nose dive in Nike’s stock in recent weeks, NKE is only 7% above its 52-week low of $68 in mid-February and still well off its one-year high of $101 last March. Wall Street will be eying the retail apparel giant’s performance in China amid tariff concerns, and looking for an indication that a return to meaningful sales growth is ahead.
Brief Overview of Nike’s Struggles
Nike has grappled with the need to innovate its product line outside of classic models like the Jordan brand, while facing increased competition from Adidas ADDYY, Under Armour UAA, and New Balance in regards to shoe apparel. Furthermore, Lululemon LULU has taken significant market share from Nike as it relates to athletic clothing apparel.
Halting the decline in Nike stock and leading to a nice bounce off its February lows was the announcement of a collaboration with Kim Kardashian’s Skims brand. The partnership, called NikeSkims, will focus on creating innovative and inclusive activewear for women and should help Nike compete with Lululemon in this regard.
Nike’s Q3 Expectations
Based on Zacks estimates, Nike’s Q3 sales are thought to have decreased 10% to $11.12 billion compared to $12.43 billion in the comparative quarter. Notably, sales in Nike’s Greater China segment are expected to be down 13% to $1.81 billion versus $2.08 billion in the prior-year period.
On the bottom line, Nike’s Q3 EPS is slated to drop to $0.28 from $0.98 per share a year ago. That said, Nike has exceeded the Zacks EPS Consensus for six consecutive quarters with an average earnings surprise of 29.82% in its last four quarterly reports.
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Monitoring Nike’s Outlook
Overall, Nike’s total sales are now expected to decline 10% this year but are projected to stabilize and rise 1% in fiscal 2026 to $46.59 billion. Annual earnings are expected to drop to $2.04 per share from EPS of $3.95 in FY24. Optimistically, FY26 EPS is projected to rebound and rise 10% to $2.25.
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Tracking NKE Stock Performance
Nike stock is down 3% in 2025 with the benchmark S&P 500 seeing declines of -5%. However, over the last year, NKE has now plummeted 27% to largely trail the broader market‘s +7% and Adidas’ +11% with Under Armour and Lululemon shares falling 8% and 30% respectively.
See also <!DOCTYPE html><html lang="en"><head> <meta charset="UTF-8"> <meta http-equiv="X-UA-Compatible" content="IE=edge"> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <title>Wealth Tax: Debating the Top Tax Bracket</title></head><body> <h2>Debate Over the Wealth Tax</h2> <p>Are the wealthy getting away with not paying their fair share of taxes, or are they carrying an unfair burden? The debate over the top tax bracket rages on as concerns about income inequality and the concentration of wealth at the top of the economic ladder continue to make headlines. Senators Bernie Sanders and Elizabeth Warren have both proposed a wealth tax on the ultra-rich, while even multi-billionaire Warren Buffett has vocally expressed support for the idea, suggesting that it is fair for wealthy Americans to be taxed at a higher rate.</p> <p>Currently, the top federal income tax rate stands at 37%, applicable to incomes of $539,000 and higher for single taxpayers and $647,850 and higher for couples filing jointly. However, historical data reveals that the top marginal tax rate has been significantly higher in previous eras. In 1944 and 1945, it peaked at a staggering 94%, and in the late 1980s, it hit a low of 28% under former President Ronald Reagan.</p> <h2>Historical Context and Present Day</h2> <p>The taxation of the wealthy has fluctuated significantly throughout U.S. history, demonstrating both higher and lower levels of taxation than the current status. This historical perspective adds complexity to the ongoing debate regarding whether the rich are paying their fair share of taxes. Despite the disputes, recent data from the IRS sheds light on the current tax scenario.</p> <h2>Top 1% Tax Contributions</h2> <p>In 2020, the top 1% of taxpayers—those earning $561,351 or more—contributed a significant 42.3% of the total tax revenue collected. This translates to the top 1% paying more income taxes than the bottom 90% combined. Astonishingly, the top 1% paid a staggering $723 billion in income taxes, while the bottom 90% collectively contributed $450 billion.</p> <h2>State-Level Analysis</h2> <p>Examining the tax burden on the wealthiest individuals at the state level yields interesting findings:</p> <h3>Alabama</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $404,560</li> <li><strong>Average income of the 1%:</strong> $1,107,769</li> <li><strong>Average income tax paid by the 1%:</strong> $263,845</li> <li><strong>Average tax rate of the 1%:</strong> 23.82%</li> </ul> <h3>Alaska</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $466,905</li> <li><strong>Average income of the 1%:</strong> $999,772</li> <li><strong>Average income tax paid by the 1%:</strong> $253,754</li> <li><strong>Average tax rate of the 1%:</strong> 25.38%</li> </ul> <h3>Arizona</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $485,146</li> <li><strong>Average income of the 1%:</strong> $1,464,848</li> <li><strong>Average income tax paid by the 1%:</strong> $369,426</li> <li><strong>Average tax rate of the 1%:</strong> 25.22%</li> </ul> <h3>Arkansas</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $387,666</li> <li><strong>Average income of the 1%:</strong> $1,483,925</li> <li><strong>Average income tax paid by the 1%:</strong> $313,266</li> <li><strong>Average tax rate of the 1%:</strong> 21.11%</li> </ul> <h3>California</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $726,188</li> <li><strong>Average income of the 1%:</strong> $2,430,790</li> <li><strong>Average income tax paid by the 1%:</strong> $655,180</li> <li><strong>Average tax rate of the 1%:</strong> 26.95%</li> </ul> <h3>Colorado</h3> <ul> <li><strong>Minimum income to be considered 1%</strong>: $609,919</li> <li><strong>Average income of the 1%:</strong> $1,799,148</li> <li><strong>Average income tax paid by the 1%:</strong> $465,284</li> <li><strong>Average tax rate of the 1%:</strong> 25.86%</li> </ul></body></html><!DOCTYPE html><html lang="en"><head> <meta charset="UTF-8"> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <title>Analysis of Minimum Income of the Wealthiest 1% and Average Tax Rates by State</title></head><body> Analysis of Minimum Income of the Wealthiest 1% and Average Tax Rates by State
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In terms of historical performance, NKE has gains of +43% over the last decade which has outperformed Under Armour’s -84% but has trailed the blazing performances of the benchmark, Adidas, and Lululemon.
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NKE Valuation Comparison
At current levels, NKE trades at a 35.6X forward earnings multiple, a noticeable premnium to the benchmark’s 21.1X and its Zacks Shoes & Retail Apparel Industry average of 11X. Still, it’s noteworthy that NKE does trade well below its decade-long high of 51.1X forward earnings and is closer to the median of 29.3X during this period.
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Bottom Line
For now, Nike stock lands a Zacks Rank #3 (Hold). It may be too soon to say NKE is in store for an extended rebound as more upside will largely depend on the ability to reach or exceed its Q3 expectations. More importantly, Nike will need to offer guidance that starts to reconfirm a return to growth at some point.
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This article originally published on Zacks Investment Research (zacks.com).
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