Strong Dollar May Hurt

What's happening with earnings of big companies for the second half of 2022? Analysts have reduced their guidance slightly, warning that a general slowdown might cause profit margins to contract. No one seems sure what to expect. We will soon get reports for the quarter ending September.

Nike is an unusual one, reporting earnings after the close this Thursday, for the three month period ending August. Expectations are low, thanks to prior warnings from big companies like FedEx, sloppy late August updates from retailers like Target and Walmart and the strong US Dollar that probably hammered Nike's overseas sales and profits. Added to that are worries about inventory levels and weak demand out of China.

Nike's stock has behaved badly this year, it's off 41.5% since January 1st. That's not good, at all. Morgan Stanley's long-time analyst Kimberly Greenberger, who covers Nike said in a note:

"While the long-term opportunity remains compelling, macroeconomic deterioration and limited visibility makes current discounted valuation fair, in our view. Until visibility improves, we see more attractive opportunities elsewhere in our coverage."

Well, let's see. Eliud Kipchoge ran the Berlin Marathon in his bright orange Nike Air Zoom Alphafly NEXT% 2 Men's road racing shoes (pictured below). He set a new world record. The shoes cost R5 899.95 per pair. Nike's sales and margins are good. We are great supporters of the company, and lifetime investors.