Nike, Inc. (NKE) is currently trading at $62.51 per share, in what has been a short-term bearish trading session. For the year-to-date, the stock has performed negatively with losses fluctuating between 0.06% – 0.32% at any given point. If we consider analysts opinion on Nike, it is still a strong buy with a mean recommendation of 1.8, where 1.0 represents a strong buy and 5.0 represents a sell. The stock has a mean target price of $71.91 per share and a high target range of $100 per share. The low target price is forecast at $32.75. While there have been few upgrades and downgrades to speak of in 2016, all of those from the latter half of 2015 pegged the stock as a positive performing stock or a buy, with the following upgrades/downgrades reported:

• September 25, 2015 – Sterne Agee CRT upgraded its outlook on Nike from a neutral to buy
• October 8, 2015 – DA Davidson upgraded its outlook on Nike from a neutral to buy
• October 19, 2015 – the BB&T capital markets upgraded its outlook on Nike from a hold to a buy

For the current month, trader sentiment remains firmly bullish on Nike stock, with the majority of traders either recommending a strong buy, a buy or a hold position, with no under-perform expectations and no sell ratings on the stock at all. In terms of its performance against the industry as a whole, it’s a no-brainer. Nike has shown strong growth overall compared to the industry and the sector, although it is not the best performing entity – it is definitely a solid performer. Consider that the year-on-year revenue growth for Q3 was 5.41% for Nike while that of the industry was 10.19%, the sector -0.94% and the S&P 500 index 2.87%. The below chart reflects the consistently positive performance of Nike, even when other categories are delivering negative returns.

Nike’s success is largely dependent on its marketability with the athletes that it endorses. It has dominated the clothing, footwear and textile scene for decades, and continues to be the dominant force. Various celebrities and high profile sports teams promote the Nike brand, but the company has come in for some tap of late when it announced certain financial obligations to various colleges, athletes, sports teams and leagues. For the fiscal year ending the 31 May 2015, Nike was obligated to pay $6.2 billion to these respective creditors. It’s not so much that Nike has obligations to sports stars and teams; it is the annual percentage increase of these obligations that concerns investors to a degree. For the year ending 31 May 2015, the $6.2 billion figure was 32% higher than the figure for 31 May 2014. If we rewind the clocks back to 2007, Nike spent significantly less at a maximum of $2 billion per annum on its commitments.

Moving forward, investors can expect Nike to be paying upwards of $10 billion per annum to various sports authorities, clubs and athletes as it seeks to maximise its endorsements and brand awareness. Provided that these deals pay dividends for Nike, the share price will continue to spike, but it is uncertain at this juncture precisely what the outcome will be. There are several disturbing aspects to Nike sponsorship and endorsement deals of late, including the following:

• Nike abruptly terminated its sponsorship of boxing superstar Manny Pacquiao after he made disparaging comments about gay people – that cost Nike a bundle.
• Other athletes who have brought Nike into disrepute include Lance Armstrong, Ray Rice, Michael Vick and Oscar Pistorius.
• Nike is facing stiff competition from Under Armor which has endorsed superstars like Jordan Spieth, Lindsay Vonn, Tom Brady and Bryce Harper among others.

As a result of its major endorsement deals, Nike is compelled to make good on its payments to its stars, even though revenues may not be quite what the company wants them to be. Massive investments in athletes, NBA, NFL, NHL and other teams do not appear to be paying off as quickly as shareholders would like. There are calls from some in the investment community for Nike to carefully evaluate the people that it endorses instead of opting to try and sign on as many up-and-coming hopefuls as possible.

According to NASDAQ analysts, for the fiscal year ending May 2016, the consensus earnings per share forecast is 2.13 with a high of 2.16 and a low of 2.1. If we extrapolate to May 2017, the consensus earnings per share forecast is 2.43 with a high of 2.58 and a low of 2.33. In May 2018, the consensus earnings per share forecast is 2.83 with a high of 2.95 and a low of 2.71. Quarterly earnings forecasts for Nike for February 2016 are coming in at 0.49, with a high of 0.54 and a low of 0.46. If you are interested in trading Nike, and you’re concerned about the flat trading for the year-to-date, the overall analyst opinion is that this is a bullish stock and it should be invested in. Nike has a strong buy rating, as evidenced by the opinions of professional traders across the spectrum.

Consensus Opinion: Buy Nike Stock

Another measure that I’ve always used to evaluate the feasibility of buying stocks is that of the earnings surprise. Simply put, the earnings surprise is the added benefit of earnings that come in above consensus estimates and surprise investors with added extra. Nike is one of those stocks that has consistently outperformed expectations with earnings surprise figures in March, June, September and December. While the December earnings surprise was lack-lustre, it came in approximately $0.02 per share which is still a welcome surprise in percentage terms for Nike investors. Consider the following graphic as evidence of Nike’s solid performance to date.

Based on the above data, Nike makes a compelling case for call options across the board. While short-term binary options trading may not yield the desired outcomes, as an investment Nike is one of those stocks that you simply have to trade. Go long on Nike as a standard stock investment, and watch daily price movements as a binary options trader for directional cues.