Stock Price Analysis – Nike

Stock Price Analysis –Nike Name Course Instructor Date The sports apparel and footwear market has evolved over time there are different brands in the Nike is the most successful company in the world, and has positioned itself in the sports market to maintain and market its market share. As such, the brand is partly aimed at athletes, when they buy they look for safety and protection when performing physical activities the personal taste is a brand well positioned in the market as there is emphasis on comfort, quality, and innovative designs Nike has subcontracted factories outside the US who are responsible for manufacturing and overseeing operations there. Nike is a recognizable brand and has managed to grow its market share even with the threat of new entrants in the past two decades such as Under Armour and Adidas trying to gain its lost market share. In the article by Helix Investment Research (2011), the firm highlighted that Nike had potential for growth in 2011 at a time when the economy was still recovering and sales rebounded. They also advised would be investors to buy the stock as a potential bargains as their research showed that there was potential for growth. In the 2011 fiscal year, revenue was almost $ 21 billion. According to Helix Investment Research (2011) the company’s focus on retail and marketing efforts has been effective in improving growth prospects, and coupled with sales to different target markets, the company is not overly reliant on few markets, and still maintained its dominant poison. Even with macroeconomic uncertainties markets outside the US after the 2008/2009 global financial crisis the company still recorded increased growth and EPS. Nike has in the past faced accusations of ignoring the conditions of workers in sweatshops outside the US where there are dire working conditions, especially in Asia. There are problems the labor market with Nike working with contactors who failed to ensure that workers were in safe working conditions in places such as Vietnam (Greenhouse, 2001). In the past, Nike shifted blame for the unsafe working conditions on the contactors, yet continued to work with them for years. Such factories in Asia and Latin America have repeatedly failed safety standards applicable in the US, but due to their low costs and lax regulations Nike allowed shoes and apparel to be manufactured in such plants, where workers are poorly paid and work in unsafe environments. Nike examines one of the biggest sports marketers in the world, but in 2009 and 2010 the company had reduced marketing, signaling that there were concerns about expenses at a time when revenues decline (New York Times, 2009). In the revenues were $19,014 million in 2010 compared to $19,176 Million in 2009 and the earnings increased from $1, 956 to 2, 517 million. Even though, the company portability improved in 2010, the cost cutting measures war effective in improving profitability and there was more focus on efficiency. The investors expected that the company management would do more to remain competitive, despite facing challenges linked to macroeconomic factors. The price of the shares listed on the stock exchange is determined by the law of supply and demand. However, there is no exact formula to know how the value of a certain action influences the value. There are certain factors on which we can help to analyze the possible behavior of a value such as the fundamental factor, technical factors, expectations and market sentiments. It was established that there is a correlation between earnings and the stock value, and while Nike reports the financial results at 31st May of each financial year from 1996-2010. The stock values used are the yearend values and while there is a gap between the months after financial results were published and end of year profitability as well as market sentiments still affect the stock value over time. The value of the shares depends on the expected future cash flows and the profitability required by the shareholders, these are the two factors that affect the determination of future cash flows. Nike’s profitability on its investments and the growth of the company during different periods of time are useful to the investors. In turn, the profitability of the investment can depend on factors such as: the assets that have been used, the tax rates to which the company is exposed and finally the operations have been undertaken that is, and if these operations have resulted in returns on profitability. The other aspect to take into account to measure the value of the shares is the retu...