NIKE Earnings Preview: Can Shares Keep Running?

The Q2 earnings cycle is weeks away from picking up notable steam with the release of the big banks’ results, but we nevertheless have several companies reporting their results in the days ahead, which we count as part of the overall Q2 tally.

On the reporting docket this week is popular NIKE NKE, whose performance in 2025 has primarily left a sour taste in investors’ mouths. Down 18% in 2025, the stock has widely underperformed relative to the S&P 500.

Initial tariffs announcements caused a plunge in the overall profitability outlook for the company, helping explain the poor performance. But shares have overall stabilized nicely off the 2025 lows, perhaps a reflection that the worst is ‘behind’.

Let’s take a closer look at what analysts are expecting in the release and a closer look at a top-ranked peer, Birkenstock BIRK.

NIKE Bounces

Analysts have shown some modest positivity concerning the upcoming release, with the current $0.11 Zacks Consensus EPS estimate up a penny since roughly the beginning of April. Revenue revisions paint the same slightly-positive story, with the $10.6 billion in sales expected up a fractional 0.3% over the same timeframe.

While the revisions haven’t been notably positive, the stability in the revisions trends is the greater takeaway here, particularly so following the spook earlier in the year. Still, current expectations allude to an 89% drop in EPS on 15% lower sales, partly reflecting the muted demand trends and profitability crunch that NKE has been facing.

As shown below, the company’s top line has reflected softness, with minimal growth since 2022. Muted demand trends for products, primarily shoes, that experienced strong sales during the COVID era have been a major challenge, forcing NIKE to look inward and revamp its product line.

The above-mentioned profitability crunch has primarily been driven by shrinking margins stemming from higher costs, with NKE’s gross margin facing pressure since the 2022 highs. Throughout its latest period, its gross margin decreased 330 basis points year-over-year. 

Please note that the chart below tracks margins on a trailing twelve-month basis.

NKE shares are relatively expensive heading into the print, with the current 31.3X forward 12-month earnings multiple above the 30.7X five-year median and well higher than the respective Zacks Apparel industry average.

The current PEG ratio works out to 2.1X, in line with the five-year median and compared to 1.1X from the Zacks Apparel industry average. The stock has a Style Score of ‘D’ for Value.

Birkenstock Posts Rock-Solid Quarter

While NKE’s broader EPS outlook remains negative, as reflected by its Zacks Rank #4 (Sell), top-ranked Birkenstock (BIRK) has seen the opposite, with analysts positively revising their EPS expectations across the board over recent months.

Notably, Birkenstock upped its revenue guidance following its latest release thanks to strong demand across nearly all products, again the opposite of what NKE has been facing. The company posted double-digit percentage sales growth across all of its segments in the print, also seeing its gross margin expand from 56.3% to 57.7%.

Putting Everything Together

NIKE NKE shares have struggled in 2025 due to softening demand and a profitability crunch, with the former being a thorn in the side for seemingly years. Weak demand trends from previously successful products have remained persistent, with the company looking to revamp its offering to re-capture consumers’ wants.

While shares have already been taken well lower off their highs from several years back, the reality is that the stock remains quite expensive, with its current Zacks Rank #4 (Sell) alluding to further near-term pressure.

Nonetheless, NIKE can turn the narrative back around entirely by delivering strong results and commentary surrounding its consumers, but that has yet to be seen. A peer, Birkenstock BIRK, has seen much healthier demand trends paired with margin expansion, with its current Zacks Rank #2 (Buy) reflecting the cherry on top.

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This article originally published on Zacks Investment Research (zacks.com).

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